Free Markets, Free People

Lies, deficits and even more irony

I’m sure you have seen the chart that’s been circulating by Rex Nutting of Marketwatch in which he claims that Obama has overseen the least growth in federal spending.  In fact what Nutting reproves is the old “lies, damn lies and statistics” cliché.  James Pethokoukis  takes his argument apart here.

Then there is this story today.  It too pokes huge holes in the attempt downplay spending for the past few years during the Obama administration.  In this case the story points out the accounting practices, or lack thereof, that Congress uses that would likely find any business using them accused of keeping double books:

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.

If you think unemployment is under reported, when it comes to the deficit, you ain’t seen nothin’ yet, brother.

$5 trillion dollars.  Let that sink in a bit.   If this were any business out there using standard accounting rules, that’s what they would, by law, have to report.

Congress?   Well, they’re special.  They get to make up the rules as they go along and then follow them only if they wish too (with the option then of again changing the rules to fit what they’ve decided to do).  In fact, since today seems to be irony day, the irony is:

"By law, the federal government can’t tell the truth," says accountant Sheila Weinberg of the Chicago-based Institute for Truth in Accounting.

Amazing but not shocking.  In fact, not even surprising.  We didn’t get here by being told the truth.

Oh, and remember real unemployment is at 8.1%. (*cough, cough*)

Forward!

~McQ

Twitter: @McQandO

17 Responses to Lies, deficits and even more irony

  • This is so pathetic, I actually feel sorry for people like Nutting.  Selling your integrity is awful.  I really cannot imagine.
    I also cannot imagine anyone so stupid they will believe this, and feel enormous pity for them.  Erp…???
    Rush reported the chart Nutting used was lifted from a Pelosi staffer’s work.  Simply awful…

    • I spotted that Nutting piece yesterday morning and it made my blood boil.
      It was so frustrating that there was no comment section of reply email address.  I finally put in my comments on the WSJ complaint tool.

    • You know, if we assume for a minute that Obama is right, then the stimulus is Bush’s and Obama hasn’t done anything except play golf for the the last 3 1/2 years.

  • And they wonder why most citizens of this country hold politicians and bureaucrats in such low regard.
     
    Never Trust Government Numbers

    John Stossel

    http://reason.com/archives/2012/02/16/never-trust-government-numbers
     
    I have called Mr. Obama a pathological liar before and so far he has done nothing to prove me wrong.

  • I like this part.

    Jim Horney, a former Senate budget staff expert now at the liberal Center on Budget and Policy Priorities, says retirement programs should not count as part of the deficit because, unlike a business, Congress can change what it owes by cutting benefits or lifting taxes.
    “It’s not easy, but it can be done. Retirement programs are not legal obligations,” he says.

    Fine.  If a law is on the books that requires spending then account for the spending.  When you repeal a law and the result is lower spending then you can remove the accounting for it.

    • Amen.  It is called a “contingent liability”.  You have to carry them on your books.
      And…like they’ll walk away from entitlements after all they did to get them there…

    • Just ask the folks who used to work at LTV Industries about changing the rules on retirement plans.
      After the bankruptcy court was done .. they got nothing.

  • ” Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements…”

    I am confusxed. My accounting is a bit rusty, but there are various kinds of financial statements. A promised retirement commitment or other debt would be a liability found on a balance sheet. Current payments for retirement commiments would be an expense on an income statement. The income statement matches revenues and expenditures for a defined period, usually a year. A deficit or surplus is the difference between revenues and expenditures during this period.  A budget need not include obligations occuring outside the budget period.

    Costs and commitments are not the same thing. 

    • Think “balance sheet”.  Also, think FUNDING for future liabilities, which would be a current expenditure.

      • “Think “balance sheet”.”

        Yes, but only assets and liabilities go on balance sheets, not  expenditures.
        The national debt would be on a balance sheet, not the annual deficit.

        ” FUNDING for future liabilities, which would be a current expenditure.”

        Yes, it would, but there isn’t any. And it would appear as an asset on the balance sheet, lessening the net debt.

  • Can we move all the defense spending needed for 911 because Bush inherited Al qaeda?

  • I keep hearing how it is against the law for Congress to fail to pass a budget, but I have yet to learn what the consequence is supposed to be.  Serious question–what mandates this and why is there no fallout from having broken such a law (other than having their asses kicked to the curb come election time)?  Make up the rules as they go along, indeed.

    • No, there is no enforcement mechanism. Although a president with a lot of balls, who didn’t care who he pissed off could use the constitution as a reason to lock them all in a room and not let them out until they came up with a budget.

      • The same is true of a Congress that finds an Administration official in contempt, if they had the balls

  • Yeah, Rex was lying, but even if his facts were solid on this it would be wrong. Obama’s big action was Obamacare, which WILL significantly increase government spending in the future. It isn’t just the spending you do while in office. What is really killing us is the spending that results, years and decades later, from the decisions politicians made.

    Social Security might have been a fine thing if it was judged only for the era of FDR. Same for medicare and LBJ. Now, decades later, these two programs are the elephant in the room.

    • To add a little, since I can’t edit: the left likes to look at correlation while ignoring causation. It likes that deficits rose under Reagan and dropped under Clinton, without considering that the opposition party Congress was the prime driver, for one example.