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Sunday, 29 November, 2020

Cookin' The Books

Date: 15 November, 2006

By: Chief

Imageust about everybody hates public corporations. The reason for this is simple: the executives of public companies lie through their teeth. Especially when it comes to accounting. Companies such as Enron, Global Crossing, World com and AOL/Time Warner come to mind. People lost quite literally their shirts along with their life savings courtesy of illegal book keeping.

When those less than stellar companies finally owned up to their shenanigans the results were predictable. Outrage and scandal on a huge scale. The Securities and Exchange Commission investigated these companies. So did the U.S. 'Just Us' department. And our duly elected Congress went into over-speed passing new corporate accounting and governance acts.

Some of those companies executives went to prison. Some were heavily fined. Most got off free as a bird.

Now I told you that story in order to tell you this one and this one is a real barn burner. What Congress outlawed companies from doing — Congress does itself.

That is right. Congress cooks the federal books.

Cookin' the books

Indeed Congress keeps two very distinct sets of accounting books. One set for We the People's consumption which is semi-rosy. The other set of accounting books is for internal government use primarily, though you can get a copy. This internal set of books is drafted by government accountants using standard accounting procedures.

The difference is astounding. Using the 'public' books for the year 2005, the federal deficit was $318 billion. Using the 'private' books for the same year the federal deficit was $760 billion. That is not taking into account Medicare and Social Security. If Medicare and Social Security had been added in the actual federal deficit for 2005 would have been a staggering $3.5 trillion.

Now isn't that just a fine howdy do? Actually it is more like a kick in the 'nads with a steel toed boot.

According to USA Today:

"The government has run a deficit of $2.9 trillion since 1997, according to the audited number. The official deficit since then is just $729 billion. The difference is equal to an entire year's worth of federal spending."

Remember when the Klinton administration was bragging about having a 500 billion dollar surplus or there abouts? Remember that? That was the public books doing all the talking. The private books stated there was a deficit of $484 billion. That is difference of 984 billion dollars. Just a tad more than a minor accounting error don't you think?

Further the USA Today story reports:

"In addition, neither of these figures [Klinton administration] counts the financial deterioration in Social Security or Medicare. Including these retirement programs in the bottom line, as proposed by a board that oversees accounting methods used by the federal government, would show the government running annual deficits of trillions of dollars.

"The Bush administration opposes including Social Security and Medicare in the audited deficit. Its reason: Congress can cancel or cut the retirement programs at any time, so they should not be considered a government liability for accounting purposes."

What is even worse is that some of the federal departments books are so bad (and it happens yearly), including the Department of Defense, that auditors from the Treasury Department refuse to certify the accounts.

Everything costs money. Just consider for a moment the new Medicare prescription drug debacle that King George the Bush really pushed for and ultimately got. If proper accounting procedures were followed that drug plan would add approximately $8 trillion to the federale deficit. That is an awful lot of pills flying off the local pharmacy shelf.

In other words our federale government officials have been lying through their teeth to us. To We the People. Just exactly like the executives of Enron, Global Crossing, World com and AOL/Time Warner have. The singular difference is no Congressman, cabinet member or executive branch member has gone to trial — let alone served one second in prison. And none ever will.

That needs to change.

There is a federal accounting board whose membership is comprised of government officials and real world (civilian) accounting professionals. The professional accountants want to add in Medicare and Social Security costs. The government side of the board does not.

The government side wants to continue using what is known as cash accounting while the professional accountants want to use accrual accounting — a much more accurate way of doing things, if I understand the concept correctly.

To be sure, federal law requires that companies which make over one or two million dollars a year in revenue use accrual accounting. Well my feeling about that is 'if it is good for the goose then it is good for the gander' as well. Besides, as a member of We the People and as not a real happy taxpayer I have a right to know the unvarnished truth about our federal government's handling of our money. You have too. And it is very obvious our government is pretty loose with our money. Hell's bells, a blind man could see that.

The feds say that Medicare and Social Security should not be counted because and you're really not going to like this, neither is a:

"[P]ension or legally binding federal obligation."

So sayeth Stephen Goss of the Social Security Administration. And we pay Social Security taxes for what purpose then Mr. Goss? I do believe there are many people who would dispute Goss's statement. See, I told you — you would not like it.

The whole deal is this — what is our country's financial bottom line? Is it better or worse than in previous years? What is Congress doing about it? Most importantly though is does anybody actually know what financial shape our country is in?

I just want the truth. Hah. Truth and our federal government — now there is an oxymoron without peer.

If the picture is rosy then say so. If on the other hand the picture resembles the inside of a septic tank — so state. It isn't that difficult. But if the picture is indeed wretched — what are you, our elected representatives, intending to do about it?

Our elected representatives had better talk to We the People first before those boneheads in Washington do anything. Congress and the various occupants of the Whitehouse have spent our money like there was no tomorrow. Well, the way things are looking tomorrow is coming due real soon and it ain't going to be pretty wake up call. As such, We the People should make the financial decisions and communicate our decisions to Congressional members in such a way that those political fools cannot mistake our demands.

Congressman Mike Conaway, a Republican from Texas and a certified public accountant to boot, believes that the accrual accounting system provides a clearer picture of our government's financial health. Conaway said:

"An old photographer's adage says, 'If you want a prettier picture, bring me a prettier face' " (quoting USA Today).

So true — so very true.

Right now it appears to me that the face appearing on our federale government's financial picture is so ugly that not even a mother could love it.

[Ed. note: This story has been updated.]

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