WHAT'S THE REAL FEDERAL DEFICIT?
August 3, 2006
A growing number of Congress members and accounting experts say it's time for Congress to start using audited financial statements (produced by the government's accountants following standard accounting rules) when making budget decisions. Accurate accounting would force Congress to show more restraint before approving popular measures to boost spending or cut taxes, say observers.
Using audited financial statements, the overall deficit would better reflect its fiscal situation:
- The $318 billion deficit reported in 2005 would balloon up to $760 billion.
- The deficit would equal $6,700 for every American household rather than the $2,800 given last year.
- The running deficit since 1997 would equal $2.9 trillion, rather than the official $729 billion reported by the government.
- The Clinton administration reported a surplus of $559 billion in its final four budget years; the audited numbers showed a deficit of $484 billion.
In addition, none of these figures counts the financial deterioration in Social Security or Medicare. Including these retirement programs in the bottom line would show the government running annual deficits of trillions of dollars, say observers:
- The government would have reported nearly $40 trillion in losses since 1997 if the deterioration of Social Security and Medicare had been included.
- The new Medicare prescription-drug benefit alone would have added at least $8 trillion and could have added up to $11 trillion when combined with other new liabilities and operating losses.
- The federal government would have had a $12.7 trillion deficit in 2000 because that was the first year that Social Security and Medicare reported broader measures of the programs' unfunded liabilities.
Source: Dennis Cauchon, "What's the real federal deficit?" USA Today, August 3, 2006
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