U.S. government: 2+2=5, or is it 2+2=3?
U.S. deficit's funny math
WASHINGTON
The U.S. government will close the books on fiscal 2006 Saturday, and politicians are likely to trumpet that the federal deficit came in almost $60 billion below projections. Problem is, they won't be using the same math that you use.
The nonpartisan Congressional Budget Office has projected that the federal deficit for the fiscal year ending Sept. 30 will total around $260 billion, aided by a surge in revenues. That's $58 billion lower than last year's deficit and about $77 billion lower than projections at the beginning of the fiscal year.
Great news? Budget experts in Washington and on Wall Street say it's a welcome development, but misleading. Washington's funny math excludes the Social Security trust fund, which is running a $177 billion surplus this year. Washington spends it, but doesn't count it as spending. It's officially listed as "off-budget" borrowing.
"In practice, all the money Washington collects goes into the same pot and gets spent the same. On paper, we say we'll pay Social Security back later," said Brian Riedl, chief budget analyst for the Heritage Foundation, a conservative research center.
So the deficit is actually about $437 billion, the CBO calculates -- the $260 billion official deficit plus the $177 billion borrowed from the trust fund. Since the money is "borrowed," it adds to the gross federal debt, which is expected to reach about $8.5 trillion by Jan. 1.
This is why New York investment bank Goldman Sachs & Co. issued a dour report Sept. 22 titled, "The U.S. Budget Outlook: No Lasting Improvement."
(The rest is here and here.)
Comptroller General David Walker, the nation's chief accounting auditor, has added up all the federal government's unfunded liabilities, or promises, and offers a present-day figure of $46 trillion. Think of that as promises to the tune of $155,932.18 for each of the 295 million Americans.Kevin G. Hall, McClatchy News Service
WASHINGTON
The U.S. government will close the books on fiscal 2006 Saturday, and politicians are likely to trumpet that the federal deficit came in almost $60 billion below projections. Problem is, they won't be using the same math that you use.
The nonpartisan Congressional Budget Office has projected that the federal deficit for the fiscal year ending Sept. 30 will total around $260 billion, aided by a surge in revenues. That's $58 billion lower than last year's deficit and about $77 billion lower than projections at the beginning of the fiscal year.
Great news? Budget experts in Washington and on Wall Street say it's a welcome development, but misleading. Washington's funny math excludes the Social Security trust fund, which is running a $177 billion surplus this year. Washington spends it, but doesn't count it as spending. It's officially listed as "off-budget" borrowing.
"In practice, all the money Washington collects goes into the same pot and gets spent the same. On paper, we say we'll pay Social Security back later," said Brian Riedl, chief budget analyst for the Heritage Foundation, a conservative research center.
So the deficit is actually about $437 billion, the CBO calculates -- the $260 billion official deficit plus the $177 billion borrowed from the trust fund. Since the money is "borrowed," it adds to the gross federal debt, which is expected to reach about $8.5 trillion by Jan. 1.
This is why New York investment bank Goldman Sachs & Co. issued a dour report Sept. 22 titled, "The U.S. Budget Outlook: No Lasting Improvement."
(The rest is here and here.)
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