The federal deficit is worse– much worse– than you may think.
That’s because there’s government-style accounting, which reported an offi- cial deficit in the last budget year of $1.3 trillion.
Then there’s real-world accounting, the kind that applies to businesses and state and local governments.
By federal law and under accounting rules set by oversight boards, most entities have to include retirement commitments in their financial records.
But Congress and the president use a different set of rules (of course), so shortfalls in obligations such as Social Security and Medicare aren’t included in the official deficit report.
USA Today, however, calculated the deficit with entitlement programs included. And the newspaper found– are you ready, for this? Best hold on to something firm– that the actual deficit last year was $5 trillion.
There’s more, and you really should sit down for this one.
To cover the promises it has made to retirees and current workers, the federal government would need $22.2 trillion (yes, that’s with a T) set aside in reserves and earning interest.
Such reserves don’t exist, of course.
Instead, the government continues to pile up more debt, at increasingly alarming rates.
Now some apologists for deficit spending try to downplay these types of warnings. The federal government, they argue, can do things that others can’t.
It can, for example, print money– lots of it.
But there’s also a consequence that tends to kick in when the government increases the overtime budget at the Bureau of Engraving and Printing. A wicked inflation rate, the result of flooding the market with more dollars, would help tame the debt, but it also would inflict considerable pain on lots of ordinary Americans.
The government also can break (“bend” would be the more polite word here) its promises.
“It’s not easy, but it can be done,” Jim Horney, a staff member of a liberal think tank, the Center on Budget and Policy Priorities, told USA Today.
“Retirement programs are not legal obligations.”
Now doesn’t that make you feel better? The government doesn’t really have to send you the Social Security checks you’ve calculated into your retirement plans.
If that prospect doesn’t satisfy you, this would be a good time– in an election year, to look for candidates who are serious about forcing the government to fi- nally get serious about fiscal responsibility.–Indianapolis Star