USA Today: Real FY2012 deficit is … $5 trillion

posted at 12:41 pm on May 24, 2012 by Ed Morrissey

What would happen if Congress had to apply the regulations in Sarbanes-Oxley, Dodd-Frank, and other corporate accounting law to its own balance sheets?  Instead of talking about trillion-dollar deficits, USA Today reports from its analysis, we’d be talking about five times that amount:

The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, a USA TODAY analysis finds.

Under those accounting practices, the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported under unique rules set by Congress.

A U.S. household’s median income is $49,445, the Census reports.

The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.

The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government’s books.

Why doesn’t Congress follow the same accounting rules for its unfunded future liabilities that it requires of businesses and lower levels of government?  The long answer is that these liabilities are arguably not incurred until the federal government pays them.  Congress can change the statutes governing Medicare and Social Security at any time to reduce or eliminate these future liabilities.  Therefore, the official budget numbers only account for the liabilities that come due in the same budget cycle.  In fact, USA Today gets that exact explanation from an analyst at the progressive Center on Budget and Policy Priorities, which tells us where a great deal of the problem originates.

The short answer? Because they want to get re-elected, that’s why.  And the same politicians who screech about corporate malpractice and fraud are the same politicians who insist that there really isn’t an entitlement crisis, and that we’ll be totally OK until 2034, or 2068, or the year 2525, if man is still alive and woman can survive, etc etc etc.  They like to pass laws that apply to everyone else but themselves.  And all the while, this is what the apologists at the CBPP and politicians like Harry Reid tell us:

Keep the real deficit number in mind when politicians like Harry Reid insist that there is no entitlement crisis.  And keep this in mind the next time members of Congress thunder about the need to pass more regulation in the private sector, too.


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Obama, the Liar of the World, said he’d audit every facet of the gov’t…teh-heh. Muenchhausen is proud of him. Instead he’s gone after the whistleblowers with a vengeance.

Instead he also told all at Camp David to “spend, spend, spend” and even the Canadian and German PMs fell for the spell of the modern day Christ.

May he and they all spontaneously combust.

Schadenfreude on May 24, 2012 at 12:45 PM

Love the photo. Our economy…REDRUM!

parteagirl on May 24, 2012 at 12:45 PM

…you don’t say!

KOOLAID2 on May 24, 2012 at 12:45 PM

Government runs a cash based accounting system not accrual. This is not really new news. And it’s not hard to figure out either.

lorien1973 on May 24, 2012 at 12:45 PM

…the inmate is running the insane asylum!

KOOLAID2 on May 24, 2012 at 12:46 PM

Bush’s fault!!!!!

……………..forward.

Baxter Greene on May 24, 2012 at 12:48 PM

Anyone who has been paying attention, knows that the government makes up numbers out of whole cloth.

And when the numbers start moving in a direction they don’t like, they simply change the formula. Example – if we measured inflation the same way we did during the Carter administration, it’d be over 10%. So they change the formula and bingo – now we’re faced with deflation? Funny how that works.

Solution, how to force the government to show the real numbers? Beats me.

Rebar on May 24, 2012 at 12:48 PM

Congress: “What is this real world you speak of?”

gravityman on May 24, 2012 at 12:48 PM

“Are you better off than you were $5 Trillion Dollars ago…?”

Seven Percent Solution on May 24, 2012 at 12:48 PM

So you’re saying Congress is full of liars and crooks? Who knew?

Bitter Clinger on May 24, 2012 at 12:49 PM

“It’s for the Childeren ! ”

To pay back, that is.

Jabberwock on May 24, 2012 at 12:50 PM

Why doesn’t Congress follow the same accounting rules for its unfunded future liabilities that it requires of businesses and lower levels of government?

Because Congress decided a long time ago to use Bernie Madoff accounting rules.

Unless we start doing something about it, we are all going to have a bad end, just like Mr. Madoff.

MessesWithTexas on May 24, 2012 at 12:51 PM

Why doesn’t Congress follow the same accounting rules for its unfunded future liabilities that it requires of businesses and lower levels of government?

Why are they not on Social Security and The ‘Affordable’ Care Act?

For exempting themselves from the laws they make the people live under, they need to be sent back home…yes, for this alone.

The Primadona in Chief and the Congress should have to live under the laws they pass for the people to follow. No exemptions!!!

This s/b the biggest movement in any free land.

Schadenfreude on May 24, 2012 at 12:51 PM

lorien1973 on May 24, 2012 at 12:45 PM

Don’t think so. If it was a true cash based system the assets would be there to cover the obligations. The lock box Al Gore trumpeted would exist. As mentioned, basic concept of Sarbanes-Oaxley.

DanMan on May 24, 2012 at 12:52 PM

The righties are bigger morons than the idiotic lefties.

At least the lefties believe their bullcaca from an idealistic standpoint…never mind that they thing all is “free”, from the so-called blue skies.

Schadenfreude on May 24, 2012 at 12:52 PM

thing = think

Schadenfreude on May 24, 2012 at 12:53 PM

Because just like the police, politicians pay attention to the law when they want to pay attention to it and don’t otherwise. It’s one thing to be lenient, it’s another to willfully not do your job.

As for politicians, it seems to come natural to them. Government accounting? Naw… not the same thing as accounting for businesses and private citizens… government accounting… well, that’s all fiat. So don’t worry…

Logus on May 24, 2012 at 12:54 PM

The short answer? Because they want to get re-elected, that’s why.

The harlots/Flukes are the people!!!

Look in the mirror. It’s the painful truth.

Schadenfreude on May 24, 2012 at 12:54 PM

Bush’s fault!!!!!

……………..forward.

Baxter Greene on May 24, 2012 at 12:48 PM

ding ding ding

cmsinaz on May 24, 2012 at 12:55 PM

Since our economy’s monetary system is based upon fiat currency and it’s all on paper and in the ether… what’s 1 trillion, 5 trillion, 15 trillion? It’s just a number.

Eventually they’ll claim that they’ll just shave off nine zeros and it’ll all be good.

Logus on May 24, 2012 at 12:56 PM

Government runs a cash based accounting system not accrual. This is not really new news. And it’s not hard to figure out either.

lorien1973 on May 24, 2012 at 12:45 PM

If the Feds were obligated to file a business tax return, they would claim a cash accounting method. If they were then audited, they would have to answer how they could claim cash when their corporate policy, actual expenditures, and guarantees to beneficiaries are clearly accrual. The evidence of the accrual method exists in the form of the annual SSA “here’s how much you’ll get when you retire” letters.

Boom.

The list of violations would then be endless.

BobMbx on May 24, 2012 at 12:57 PM

“Congress exempts itself from including the cost of promised retirement benefits.”

It’s almost like inflation not including the price of gas and food…

… or the unemployment numbers not counting those who have exhausted their benefits.

“If the press was doing it’s job…

… we wouldn’t be $15 Trillion dollars (now $16 Trillion) in debt!” – Andrew Breitbart (RIP)

Seven Percent Solution on May 24, 2012 at 12:59 PM

Absolutely unsustainable.

ITguy on May 24, 2012 at 12:59 PM

it will now become mitts fault when he takes office in jan

cmsinaz on May 24, 2012 at 12:59 PM

Cloward-Piven

ITguy on May 24, 2012 at 1:00 PM

You didn’t even quote the most damning statistic.

Federal debt and retiree commitments equal $561,254 per household. By contrast, an average household owes a combined $116,057 for mortgages, car loans and other debts.

If anything spells out exactly how flucked we are, that number that is so high it’s nonsensical would be it.

MNHawk on May 24, 2012 at 1:03 PM

Meanwhile, most of the MSM will continue to scub the bloody truth from the public.
It will be the New Media that must Luminol the Left.

redridinghood on May 24, 2012 at 1:03 PM

If Obama and his demorat sychophants can lie and deceive their way out of this insanity then we will deserve what will ultimately happen to our way of life. The lies of the polls and mainstream media are being exposed as never before.

volsense on May 24, 2012 at 1:03 PM

Cloward-Piven

ITguy on May 24, 2012 at 1:00 PM

Cloward-Piven+Steriods=Obamanomics…

SWalker on May 24, 2012 at 1:04 PM

“Are you better off than you were $5 Trillion Dollars ago…?”

Seven Percent Solution on May 24, 2012 at 12:48 PM

+100000000

portlandon on May 24, 2012 at 1:06 PM

“Are you better off than you were $5 Trillion Dollars ago…?”

Seven Percent Solution on May 24, 2012 at 12:48 PM

+100000000

portlandon on May 24, 2012 at 1:06 PM

That knock on your door right now, that’s the DHS, and they are there to escort you to the William Ayer’s Memorial Community Reeducation and Conservative Elimination Facility (don’t forget to bring your own potato) On the positive side, 7% will be joining you…

SWalker on May 24, 2012 at 1:10 PM

If we would just print a $5 trillion bill, we could pay off this deficit and be done with it. Problem solved. We could even put Obama’s face on the bill.

(scary part is, a bunch of lefties will say “This is a great idea!!!)

jfox21 on May 24, 2012 at 1:11 PM

If we would just print a $5 trillion bill, we could pay off this deficit and be done with it. Problem solved. We could even put Obama’s face on the bill.

(scary part is, a bunch of lefties will say “This is a great idea!!!)

jfox21 on May 24, 2012 at 1:11 PM

Some hardcore progs like Beckel claim that “the deficit doesn’t matter”. Really! He says it is just irrelevant.

slickwillie2001 on May 24, 2012 at 1:13 PM

The thing is about this, is that Romney has a car elevator in his home, so he’s obviously far too out of touch to care or do anything about it.

He also put his dog on the roof, so I don’t know why anybody would trust him over Obama on the economy.

Swerve22 on May 24, 2012 at 1:14 PM

White House Financial Literacy Guide

18+ year olds

#27

If you don’t talk about a debt,
then you don’t owe it.

activites:
- First rule of insane deficit spending: Don’t talk about insane deficit spending.

- Second rule of insane spending: Don’t talk about insane deficit spending.

- Third rule of insane deficit spending: Anyone who tries to renounce American citizenship will have all their wealth stripped of them (for being greedy and thinking that they own their own money). They can leave America with the clothes on their back and all the money they can fit into a carry-on bag, but only in quarters.

ThePrimordialOrderedPair on May 24, 2012 at 1:15 PM

Anyone want to start a poll on when the dollar will collapse?

The Rogue Tomato on May 24, 2012 at 1:16 PM

Anyone want to start a poll on when the dollar will collapse?

The Rogue Tomato on May 24, 2012 at 1:16 PM

Like it already hasn’t????

SWalker on May 24, 2012 at 1:17 PM

And when the numbers start moving in a direction they don’t like, they simply change the formula. Example – if we measured inflation the same way we did during the Carter administration, it’d be over 10%. So they change the formula and bingo – now we’re faced with deflation? Funny how that works.

Solution, how to force the government to show the real numbers? Beats me.

Rebar on May 24, 2012 at 12:48 PM

…what I like the most is that nobody in the MSM is paying…more for gas…more for food…more for their heating and electrical rates…more for almost every product on the market…THAT’s NOT INFLATION!

KOOLAID2 on May 24, 2012 at 1:18 PM

Schadenfreude – I think I’m on pretty firm ground in saying Stephen Harper ain’t buying anything Obama’s selling. He may nod and smile because the US is still the 800-pound bear of North America but Harper’s got nothing in common with The One.

He and his government are sitting atop a humming economy, putting lots of money in the bank from energy revenues, little by little dismantling his predecessors’ ecoterror regime, he’s damn near everything I’d want to see in a US president.

Oh sure Canada’s still got provincial healthcare-funding issues and a wide array of leftist crackpots to make trouble for the Tories, but all in all things look better up north, both in absolute terms and relative to their trade partners, than they have since, oh, maybe 1945.

JEM on May 24, 2012 at 1:19 PM

Anyone want to start a poll on when the dollar will collapse?

The Rogue Tomato on May 24, 2012 at 1:16 PM

December 23, 1913

{not a typo}

BobMbx on May 24, 2012 at 1:20 PM

Some hardcore progs like Beckel claim that “the deficit doesn’t matter”. Really! He says it is just irrelevant.

slickwillie2001 on May 24, 2012 at 1:13 PM

Deficits don’t matter very much if you are easily outgrowing the accumulating debt. The problem with the left is every policy they advocate is anti-growth, which makes deficits really, really matter as the debt burden becomes heavier and heavier over time.

These idiots, and those in Europe, think they can just monetize the debt and it will all disappear, but they don’t understand the simple and obvious fact that you can’t monetize a debt that’s still increasing. Monetization can be effective (if not very bright or fair) but only for a stable debt. Since we continue to deficit spend like crazy, monetization just makes everything that much worse and will lead to a total collapse of the monetary system. Of course, that’s a feature to left.

ThePrimordialOrderedPair on May 24, 2012 at 1:20 PM

The thing is about this, is that Romney has a car elevator in his home, so he’s obviously far too out of touch to care or do anything about it.

Swerve22 on May 24, 2012 at 1:14 PM

Hell, with the money we are talking about I don’t think anyone can be in touch…

cajun carrot on May 24, 2012 at 1:23 PM

Anyone want to start a poll on when the dollar will collapse?

The Rogue Tomato on May 24, 2012 at 1:16 PM

The New Dollar will probably need to be introduced some time around 2014, if Barky gets re-elected. It might come a bit sooner, though, since having money with a Dog-Eater on the face is too much of a temptation for the America-haters.

ThePrimordialOrderedPair on May 24, 2012 at 1:23 PM

Since we continue to deficit spend like crazy, monetization just makes everything that much worse and will lead to a total collapse of the monetary system. Of course, that’s a feature to left.

ThePrimordialOrderedPair on May 24, 2012 at 1:20 PM

Which is why I have prepared for the future economy by stockpiling unusual items, sorta like a Monty Hall collection (I’ll give you $100 for every safety pin in your bag, etc.)

As a preview, I have in inventory well over 200k “moist towelettes” from KFC, Famous Daves, etc. I got that idea from the the movie “Book of Eli”.

BobMbx on May 24, 2012 at 1:26 PM

THAT’s NOT INFLATION!

KOOLAID2 on May 24, 2012 at 1:18 PM

It’s simple really, price of food goes up, simply stop using it in the inflation formula. Gas prices skyrocketing, not due to supply and demand but to the value of the dollar plummiting? Stop using it in the formula.

Works every time.

Rebar on May 24, 2012 at 1:33 PM

As a preview, I have in inventory well over 200k “moist towelettes” from KFC, Famous Daves, etc. I got that idea from the the movie “Book of Eli”.

BobMbx on May 24, 2012 at 1:26 PM

Great movie – really – but I would not have charged that battery for some moist towelettes.

ThePrimordialOrderedPair on May 24, 2012 at 1:33 PM

Figures can lie, and liars can figure.

Looks like the USA Today finally figured out who the liar is.

BTW, barack sucks.

DuctTapeMyBrain on May 24, 2012 at 1:49 PM

As a preview, I have in inventory well over 200k “moist towelettes” from KFC, Famous Daves, etc. I got that idea from the the movie “Book of Eli”.

BobMbx on May 24, 2012 at 1:26 PM

Whiskey and cigarettes will probably give you a good return also.

oldroy on May 24, 2012 at 1:52 PM

0 doubt about it, The 0 Economy™, is REDRUM.

Bmore on May 24, 2012 at 1:57 PM

The Liberal Democrat financial mind at work.

“Oh, you mean deficit deficit?”

“I can’t be overdrawn, I still have some checks”.

“Whoops – we’ll just have a ‘do-over’”, just like Facebook wants.

ICanSeeNovFromMyHouse on May 24, 2012 at 2:08 PM

bayam?

Del Dolemonte on May 24, 2012 at 2:24 PM

*Fingers in ears*
Lalalalalalalalalalalalalalalalalalalalalalalalal
Not True, Not True, Not True, Not True….
/Rex Nutting

Chip on May 24, 2012 at 2:36 PM

And if Social Security were operated under the same rules and scrutiny as corporations and private investments there would be a lot of Congressmen and bureaucrats in prison for perpetrating a Ponzi scheme.

gwelf on May 24, 2012 at 2:52 PM

Democrat = Dumbass

Danny on May 24, 2012 at 3:56 PM

Sure “five trillion dollars” sounds like a lot of money if you say it that way.

But when you think about it, that only works out to about thirteen billion dollars a day. So what’s the big deal?

logis on May 24, 2012 at 3:59 PM

or the year 2525, if man is still alive and woman can survive, etc etc etc.

OK, Ed, that’s funny.

jaime on May 24, 2012 at 4:00 PM

I apologize if I missed you but not one troll among the bunch? Hmmm.

CW on May 24, 2012 at 6:53 PM

You happy democrats? proud? hopeful?

F#$^ you are stupid…

tom daschle concerned on May 24, 2012 at 7:14 PM

5 trillion dollar bills stacked on top of each other would go about 339,000 miles out into space. If you could climb up that stack of 5 trillion dollar bills you’d be able to hop off onto the surface of asteroid, Hermes. And you’d still have 40,000 miles of dollar bills to go beyond that.

Heftyjo on May 25, 2012 at 12:28 PM