Funny Federal Bookkeeping
February 14, 2002
Similar to Enron, the federal government has its own dirty little accounting secrets, experts point out. They involve "double counting," off-book liabilities and spending the same dollar twice.
- For example, the United States' $46 billion obligation to the International Monetary Fund doesn't show up in the federal budget -- because, the Treasury Department says, it neither increases the deficit nor reduces the surplus.
- Or consider the surplus railroad retirement funds the government invests in the stock market -- which should be listed as an expenditure under standard accounting rules, but which the government does not officially do.
- The government implicitly recognizes an obligation not to let certain government sponsored enterprises -- such as Fannie Mae and the Federal Home Loan Banks -- fail, but those potential obligations of taxpayer monies amounting to $3.1 trillion are kept off the books.
- Social Security taxes are included in the budget as revenue -- but its attendant future liabilities are omitted.
Analysts say the federal budget routinely spends the same dollar twice. Beltway accounting rules allow the exact same tax dollar simultaneously to reflect, say, a decrease in the deficit and an increase in the Social Security trust fund.
Source: Editorial, "The Federal Enron," Wall Street Journal, February 14, 2002.
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