The further to the left or the right you move, the more your lens on life distorts.

Thursday, May 24, 2012


This morning, USA Today reports:
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.
But no worries, the President and his supporters have the solution: First, submit no budget for over three years (the Democratic senate) or submit a budget that is so outrageously inflated that it is defeated 99 - 0 in the Senate (the President). Next, demonize those who do submit an actual budget (e.g., Paul Ryan) and suggest that maybe we should make some real cuts in spending and entitlements. Then, engage in class warfare by suggesting that all will be well if only "millionaires and billionaires" pay their "fair share," knowing full well that taxing the rich will not solve the problem. Finally, insist that "investments" (a.k.a. spending) must continue their upward trajectory because, well, "we can't balance the budget on the backs of those less fortunate," can we?

The sad reality is that the United States is in trouble. Our debt crisis has been coming for a generation. And the profligate spending of both Democrats and Republicans in Congress and the White House is the cause. But that's water under the bridge. The problem exists, and it needs to be addressed now!

It's truly unfortunate that President Obama is so ideological and inept that he refuses to address this issue in any meaningful way. Interestingly, he, more than any Republican, had an opportunity to make structural changes to entitlements that would have a meaningful impact on our budget crisis. Bill Clinton helped reform medicare as a Democrat, against his party's ideological preference but with the help of Republicans who favored it. Richard Nixon opened communication with China as a Republican, against his party's ideological resistance but with the help of Democrats who favored it. In the same way, Barack Obama could have actually made his mark on history by reforming entitlements with the help of Republicans who favored it. Instead, he began his presidency along a never-ending path of bad decisions—choosing to push a program, Obamacare, that would clearly increase the deficit, and at the same time, do little or nothing to improve the overall structural failures of our existing healthcare system.

But no worries, government accounting is different. Debt isn't debt, and the President's got a plan. Or does he?