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Despite the coming disaster in entitlement spending, just the mention of entitlement reform brings yawns and not-so-surreptitious glances at watches. One of the reasons why the issue gets such low interest from the public is that the costs do not appear in financial reporting for the government. Thanks to the adherence to rules that the government forbids businesses to use, the budget deficit has been chronically and vastly underreported for decades. This practice goes back through administrations of both parties, and Congress under control of both as well.
Remember how we balanced the budget and ran surpluses in the 1990s? Well, we didn't, and we didn't even come close.
My new post at the Heritage Foundation Policy Blog discusses the problem in some detail. The discrepancy arises from the government's decision not to report retirement benefit commitments in the year made, but in the year paid. The SEC strictly forbids this practive in private enterprise because it distorts a company's valuation; once the commitment is made, the company cannot simply rescind it. However, the federal government rationalizes its decision to violate this same principle on the basis that Congress can simply vote to stop paying Medicare and Social Security benefits whenever it desires.
Not only does that distort the deficit picture, but the government doesn't provide audited balance sheets from a quarter of federal agencies, so there's no way to tell exactly how much money was spent. While Congress forces publicly held corporations to waste billions on Sarbanes-Oxley compliance, 25% of the agencies -- including the largest, Defense -- produce records so poor that no auditor will approve them.
If the government truthfully reported the deficits adding up each year, we would get an outcry for entitlement reform like no one has ever heard. Be sure to read the entire post.Sphere It View blog reactions
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» Remember That So-Called Surplus Under Clinton? from Iowa Voice
Captain Ed shows that I was right (as usual) last month when I pointed out that despite what the media and the Democrats say, Clinton most certainly did not balance the budget: Remember how we balanced the budget and ran surpluses in the 1990s? Well, w [Read More]
Tracked on August 4, 2006 9:56 PM
» About That Surplus Mr. Clinton from Right Voices
Captain Ed has a wonderful piece featured in the Heritage Foundation Policy Blog that examines the so-called surplus that Clinton claimed to have. Now before you get all uppity on me, take the time to read the piece. This is not something that was li... [Read More]
Tracked on August 4, 2006 11:20 PM
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