A $750,000 Mortgage -- But No House

Rodeo · 04-13-2006, 08:50 AM

If the US Governemnt kept its books the way it requires public companies to keep theirs, last year's deficit was $760 Billion.

Our public debt in the US today amounts to $1560,000 for every man, woman and child in America. If you are a family of four, your government has given you a $750,000 mortgage -- but no house.

What we're doing to our children is outrageous and shameful.

Red Ink Run Amok
By David S. Broder
?Thursday, April 13, 2006

The interview with Rep. Jim Cooper of Tennessee was scheduled for April 7, the final day that Congress would be in session before taking another vacation, this one a two-week break. It was expected to be a busy day in the House, with final floor debate on the budget resolution to set the nation's fiscal policy for the coming year.

But House Republican leaders pulled the bill, having failed to negotiate agreement on their side of the aisle between conservatives pressing for spending cuts and moderates trying to protect health and education programs.
So Cooper, a conservative Democrat, had plenty of time to talk about one of the most secretive documents in Washington -- the official Financial Report of the United States Government.

Cooper, a member of the Budget Committee, had referred to the document several times during that panel's truncated debate on the budget resolution. Like many of the others in the room -- including the legislators -- I had no idea what he was talking about. So I went to inquire.

Turns out there was an excuse for the widespread ignorance. The report had been completed in early December but was issued on Dec. 15. The Treasury Department, which compiled it, did not even put out a news release announcing its existence. Cooper said the total press run was 1,000 copies, and they have become such rarities that he suggested I could probably take the one he procured for me and put it up for auction on eBay.

You might think that the subject matter is as sensitive as the National Intelligence Estimate that President Bush declassified in order to discredit Joe Wilson.

And it is. The cover letter in the report from Treasury Secretary John Snow contains the bad news. Whereas the budget deficit for fiscal 2005 was officially given as $319 billion, "the government's accrual-based net operating cost . . . was $760 billion in 2005."

That $760 billion is the real difference between the money the government received and the obligations it added in the past year -- in other words, the unfunded costs being passed on to our children and grandchildren.
For years, the federal budget has been stated in cash terms, not the accrual accounting method, which Cooper said has been in use for five centuries and is now mandated for all private corporations. The difference, as he explained it, is this:

If you go to Target and buy an item for cash, it's felt in your wallet immediately. If you buy the same item on a credit card, unless you are using accrual accounting, it is disguised until the bill arrives.

The U.S. government has been running up bills -- notably the promises of pensions and health-care benefits for military veterans and millions of other retirees -- without putting the obligations on the books.

That is what is really scary about the financial report. It contains page after page of graphs showing the probable future course of income and expenditures for Social Security and Medicare. In each chart, the dotted line for spending climbs far faster than the solid line for revenue. Beginning a decade from now, the shortfalls explode in what Cooper calls "a perfect storm" of fiscal ruin.
Cooper is not alone in this worry. David Walker, the head of the Government Accountability Office, official bookkeeper for Congress, said at a briefing last week that the $760 billion accrual deficit "amounts to $156,000 of debt for every man, woman and child in America. For a family, it's like having a $750,000 mortgage -- and no house."

Walker, who has been traveling the country trying to spread the alarm, said flatly that if the tax cuts now in effect are made permanent, as President Bush is requesting, and spending continues to rise at the current rate, "the system blows up. More than half our debt is now financed by foreign countries, and they will exact a price."

Digging out of this mess "will take 20 years," Walker said, but the first step is simply to reassert the budget controls -- spending caps and a "pay-go" rule that requires offsets for any new tax cuts or spending increases.

The Republicans who let those lapse in 2002 refused once again this year to put them back in the budget resolution.

But Cooper and several Republicans on the House committee did succeed in adding a requirement to the pending bill that future budget resolutions at least show the accrual deficit numbers -- a small gesture toward fiscal responsibility.
The message is clear: Congress is balking at even minimal actions needed to get a grip on the budget. The long-term problem is far tougher and will require more leadership and courage than can be found today.

davidbroder@washpost.com

© 2006 The Washington Post Company

Mulhollanddose · 04-13-2006, 08:57 AM

Quote:

Originally posted by Rodeo
But House Republican leaders pulled the bill, having failed to negotiate agreement on their side of the aisle between conservatives pressing for spending cuts and moderates trying to protect health and education programs.

The most important part of the article. The left are obstructing fiscal discipline. Just as Clinton did. It was a Republican Congress that brought the Democrat party kicking and screaming to a balanced budget and fiscal sobriety...The only reason the public "trusts" the Democrats more on fiscal matters is because of media bias and intentional deception on the part of the DNC/media.

gaijindabe · 04-13-2006, 09:10 AM

Index socal security average life span and all this will go away... Sorry to make it so simple..

Rodeo · 04-13-2006, 09:19 AM

Nul says it's the Democrats' and media's fault that the Republican Congress and Executive have presided over the biggest expansion of federal spending and debt, ever.

And gaijindabe thinks we can make the debt go away with an accounting trick.

No wonder this country is going down the rathole.

Jim Richards · 04-13-2006, 10:16 AM

neo-cons have mad accounting skillz.

Jamie79SC · 04-13-2006, 10:28 AM

Woah Mul,

This pointless war and massive REDUCTION in revenue stemming from massive tax cuts has a lot more to do with this result than Democrats somehow forcing Republican majorities in both houses to do their bidding.

What drugs are you taking?

gaijindabe · 04-13-2006, 11:08 AM

Quote:

Originally posted by Rodeo

And gaijindabe thinks we can make the debt go away with an accounting trick.

Look up the pie chart where the money goes. We like to think most of it goes for pork projects and the military, but it does not.

The trick is 30 years living on the Federal teet and having the rest of us pay for it.

Rick Lee · Rick Lee's Garage

Well, I have to grudgingly side with Rodeo on about 80% of this issue. I know the Dems would not have spent a penny less, were they in power. But Republican voters expect their boys in DC to not spend like drunken sailors.

Gaijin, reforming S.S. is a huge issue, but it would not put a dent in the current deficit or debt. The really sad thing is we'd be in even MORE debt than we are right now, if Congress did not routinely skim the S.S. surplus to cover general spending and replace that surplus with worthless IOU's. It's the biggest example of robbing Peter to pay Paul in the world. S.S. will stop generating a surplus very soon and then Congress will either have to tighten the belt or raise taxes or both. China can't keep buying our bonds indefinitely.

EdT82SC · 04-13-2006, 11:11 AM

Quote:

Originally posted by gaijindabe
Index socal security average life span and all this will go away... Sorry to make it so simple..

It's not that simple. Do you know why social security was started? To get old people to stop working so young people could get jobs. What happens to unemployment if millions of people stop retiring?

EdT82SC · 04-13-2006, 11:12 AM

I'm not saying don't adjust the social security benefit age. I think we should. I'm just saying that it is not a magic bullet, and it will have some affects that some may not have considered.

Rick Lee · Rick Lee's Garage

Retirement age needs to be raised to at least 70 or 72. As much as I hate raising taxes and as much as I'd rather S.S. just be abolished, as long as we're gonna keep it, I don't know why folks don't have to pay SS taxes on income above $90k. But even if S.S. were made perfect, it wouldn't fix our debt/deficit.

turbo6bar · 04-13-2006, 12:09 PM

Quote:

Originally posted by Rodeo
David Walker, the head of the Government Accountability Office, official bookkeeper for Congress, said at a briefing last week that the $760 billion accrual deficit "amounts to $156,000 of debt for every man, woman and child in America. For a family, it's like having a $750,000 mortgage -- and no house."

How does this work? $760B divided by 250million Americans = $3000 debt per person and not $156k.

Nevertheless, I do believe rampant spending by the government AND its citizens is a great threat to this nation.

Quote:

It's not that simple. Do you know why social security was started? To get old people to stop working so young people could get jobs. What happens to unemployment if millions of people stop retiring?

Here are two options:
1) let folks retire early. They suck on the teet and contribute little to the nation's productivity.
or
2) folks work later into life. They don't suck on the teet and they contribute to the nation's productivity.

Which option reduces the burden on the nation and its social programs? Which option increases the burden on the nation and its social programs?

I have said this before, but we should send the baby boomers to Mexico. If we can flood the country quickly, Vicente Fox will concede and stop the flow of illegals to America. I suggest 2 baby boomers for every illegal Mexican here.

gaijindabe · 04-13-2006, 12:25 PM

Quote:

Originally posted by EdT82SC
What happens to unemployment if millions of people stop retiring?

Ha, Turbo6 beat me to it! You Sir, have just solved the problem of illegal immigration. Someone call the media.

Jim Richards · 04-13-2006, 12:37 PM

here's the debt counter for those that enjoy looking at big numbers...

http://www.brillig.com/debt_clock/

EdT82SC · 04-13-2006, 12:52 PM

Now that we've solved it, you get the AARP to fall in line, and we'll be set.

RoninLB · 04-13-2006, 01:04 PM

discounting the above activist rantings at least one has to admit that when you vote for a Dem it's for the truth in advertising. The Reps were empowered on an economic platform. They may lose the House on that same platform due to false advertising.

Rick Lee · Rick Lee's Garage

Concur with RoninLB.

Jim Richards · 04-13-2006, 01:16 PM

ditto, for the most part

onewhippedpuppy · 04-13-2006, 01:19 PM

We have a government full of doctors and lawyers, it's no wonder they blow money like there's no tomorrow. Put a bunch of tight, self made business owners in there, back them up with some CPAs, and we'll be set. I don't care if you're left or right, this is an issue where 95% of politicians suck. They all want to give their constituents everything they want so that they are re-elected, it's a vicious cycle. How about a term limit? Maybe then they would get something done.

Hugh R · 04-13-2006, 01:27 PM

Quote:

Originally posted by Rick Lee
I don't know why folks don't have to pay SS taxes on income above $90k.

Uh, because you only get an annualized return on YOUR money of about 1% and the gubmit is still using your SS funds to fund "off budget" projects. Uh, because its the one part of your income that you've "invested" that you can't leave your grandkids. Uh, becaue they make you pay it and will lock you in jail if you don't just like not paying other "taxes". Uh, Because they wo,n't give you more money in retirement comensurate with the additional amount your for forced to pay in? How's that for a few reasons.