Posts Tagged ‘Show Government Statistics’

Alternative Fiscal Deficit and Debt – Scary Stuff

April 24, 2011

I am loving Shadow Government Statistics.  Very interesting reading.

One scary page was the 2010 Financial Statements of the U.S. Government.  The US government uses cash accounting – something a small business of 1-2 employees would use.  Meanwhile, in the real world, any company with more than 10 people uses GAAP accounting (or accrual accounting).

With GAAP, if you owe money in the future (like, umm, social security checks) to someone, you have to call it out on your financial statements now.  With companies using GAAP, this call-out usually becomes a liability (aka debt).  This attempts to clearly shows investors what the company’s future looks like.

But the federal government doesn’t do this.  If it accrues liabilities (like Obamacare or Medicare for baby boomers), the Feds don’t include these future debts in the financial statements. They just count the cash in and cash out in one year.  Like a babysitting business would.

This year, the Federal government ran a cash deficit of $1.294 Trillion.  An already disgusting number.  But, what if we required the Feds to use GAAP (just as GE, WalMart, and any other business does).  Oh, in that case, Shadow Government Statistics estimates the deficit this year at $5.3 Trillion (4X HIGHER!).

And what if we did this into the future?  Well, in that case, our already disgusting federal debt of $14.2 Trillion explodes to $76.3 Trillion in current dollars.

Who’s got that in their savings account?