Pensieri di un lunatico minore

Federal budget, Enron-style

While this is an old article (2006), USA Today has an article about the real federal deficit. I can’t imagine it’s gotten any better in the interim.

The federal government keeps two sets of books.

The set the government promotes to the public has a healthier bottom line: a $318 billion deficit in 2005.

The set the government doesn’t talk about is the audited financial statement produced by the government’s accountants following standard accounting rules. It reports a more ominous financial picture: a $760 billion deficit for 2005. If Social Security and Medicare were included — as the board that sets accounting rules is considering — the federal deficit would have been $3.5 trillion.

For those who think Bill Clinton was all roses financially, it wasn’t:

The Clinton administration reported a surplus of $559 billion in its final four budget years. The audited numbers showed a deficit of $484 billion.

The government needs to start using the same accounting procedures that all corporations are required: GAAP. They’re not perfect for the different structure, but it seems only fair that the government play by something resembling the same rules as the rest of the organizations in America. If not strictly using GAAP, they should use that as the basis and specifically derive changes that are codified and available to the public to understand.