Thursday, August 03, 2006

USA Today: What's the real federal deficit? - How many billions (or trillions) of dollars depends on how you do the accounting

USA Today's page 1A story is not surprising considering our government's books would not withstand Sarbanes-Oxley review [Also see BizzyBlog's 'Announcing the “We’re Out of Control, and Sarbanes Oxley Should Apply to Us” Winner for 2005'].

From 'What's the real federal deficit?':
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.

Congress has written its own accounting rules — which would be illegal for a corporation to use because they ignore important costs such as the growing expense of retirement benefits for civil servants and military personnel.

Last year, the audited statement produced by the accountants said the government ran a deficit equal to $6,700 for every American household. The number given to the public put the deficit at $2,800 per household...


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