GET REAL ABOUT BUDGETING BEFORE IT'S TOO LATE
Budget debates on Capitol Hill will never be the same, now that we have proof that presidential budgets have failed us, not because of their spending priorities but because of bad accounting. The Bush administration keeps two sets of books but shows Congress only one of them.
Don't take my word for it. Read "The Financial Report of the United States ," issued by the U.S. Treasury every year but suppressed by the White House. Never heard of it? You are in good company. David Broder of The Washington Post called it one of the most secretive documents in Washington , D.C. It is issued just before Christmas without a press release, and with a print run of 2,100 copies. That's why I persuaded a publisher to release the "Financial Report" in every bookstore in America , just in time for the fall campaigns.
If you use proper accounting, federal budget deficits are at least two, and probably 10, times larger than President Bush will admit. Remember President Bush's press conference last month claiming that his deficits are smaller than expected? He simply wasn't counting veterans' benefits, civil service retirement, Social Security or Medicare. We can't pretend that we care about those benefits if we don't count them.
How large is the deficit? Was the 2005 deficit $318 billion as the president admits, or $760 billion, or even $3.3 trillion? Is it 2.6 percent of gross domestic product, 6.2 percent or 26 percent? History will not be kind to governments that cannot put the decimal point in the right place.
Congress is clueless on this issue. More Members were briefed on the ultra-secret National Security Agency wiretapping than on this report. The Budget committees ignore it. Most Members have no idea that Congress and the White House have been using old, outmoded bookkeeping while the White House keeps the real numbers hidden.
The president himself is in the dark. I recently asked the new director of the Office of Management and Budget, Rob Portman, to tell the president about the report. I told him that he couldn't be fired for delivering bad news on his first day on the job. But Director Portman apparently chickened out. The president has given no indication that he is aware of the Treasury Department numbers. As the first MBA president in history, Mr. Bush has a particular obligation to use modern accounting.
Congress also has ignored one of the most important news events of the summer. For the first time in history, the White House may be forced to tell the truth about Social Security and Medicare. The Federal Accounting Standards Advisory Board voted 6-4 to include Social Security and Medicare obligations as liabilities on our national balance sheet. Incredibly, we elected officials have been promising the benefits without bothering to budget for them. The FASAB vote will change that.
Fiscal problems such as these are literally destroying America 's credit. Standard & Poor's, the nation's leading credit analyst, is projecting that the United States will lose its AAA bond rating by 2012 and fall to junk bond status by 2025. S&P obviously sees larger deficits than President Bush does.
Do you trust Standard & Poor's, or Bush and Cheney, on this issue?
How could Washington be so confused? Just the word "accounting" can make people's eyes glaze over, but, as they say in business, "If you can't measure it, you can't manage it." Today Congress cannot accurately measure its debts or manage its deficits. We cannot even monitor the use of the national credit card because our accounting methods are so primitive. No large business in America or nonprofit is allowed to rely on our method of accounting. We've literally made it illegal for everyone else.
The first plank of the Republican "Contract with America " demanded that Congress live by the laws it passed for the rest of the nation. Surprise! We've been exempting ourselves from the most important one of all: telling the truth about our own budget problems.
Meanwhile, the coming debt crisis is best described by Peter Fisher, a former Bush Treasury official: "Think of the federal government as a giant insurance company (with a sideline business in defense and homeland security) which only does its accounting on a cash basis. ... An insurance company with cash accounting is not an insurance company. It is an accident waiting to happen."
An accident waiting to happen! America deserves better than that.
Rep. Jim Cooper (D-Tenn.) wrote the foreword in "The Financial Report of the United States," published by Nelson Current.