Some depressing financial news:
The federal government recorded a $1.3 trillion loss last year — far more than the official $248 billion deficit — when corporate-style accounting standards are used, a USA TODAY analysis shows.
The loss reflects a continued deterioration in the finances of Social Security and government retirement programs for civil servants and military personnel. The loss — equal to $11,434 per household — is more than Americans paid in income taxes in 2006.
“We’re on an unsustainable path and doing a great disservice to future generations,” says Chris Chocola, a former Republican member of Congress from Indiana and corporate chief executive who is pushing for more accurate federal accounting.
Modern accounting requires that corporations, state governments and local governments count expenses immediately when a transaction occurs, even if the payment will be made later.
The federal government does not follow the rule, so promises for Social Security and Medicare don’t show up when the government reports its financial condition.
Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.
Makes the incompetence regarding the current budget deficit seem trivial. Recognizing that global warming is inevitable and we aren’t ever going to do anything about it, and understanding that a complete and total financial collapse of the US government in my lifetime is likely makes me want to just say to hell with it all. When I read news like this I just want to ignore it all, do whatever I want, much like one of my favorite Grateful Dead songs:
You imagine me sipping champagne from your boot
For a taste of your elegant pride
I may be going to hell in a bucket, babe
But at least I’m enjoying the ride, at least I’ll enjoy the ride.
Might as well enjoy the descent. Just pretend it is a roller coaster, and drink heavily.
Bubblegum Tate
Yes, except the rich got tax cuts, and therefore everything is hunky-dory.
KCinDC
Forgive me if I don’t accept as gospel any account that mentions Social Security as the country’s number one budget problem, especially when the spokesman quoted is one of the bamboozling scoundrels tossed out on their ears in last year’s election (and for good measure is a corporate CEO).
I’m sure things are bad, but I doubt that such people are the right ones to make the diagnosis or prescription.
Zifnab
This I never understood. Why do Republicans hate social security? Listen, I understand that if you’ve got a million dollars and think you can support yourself till you die, you don’t want to support anyone else with you. But did Corporate America notice the epic mess that is the Health Insurance Industry? Don’t they realize that entirely privatized retirement would result in the exact same hackneyed shinanigans that cause them such gigantic headaches when their insurance bills come due? If I had 50 employees, I’d thank my lucky stars for SS. If I had 5000, I’d practically worship the system. 6.2% of my employees’ salary to pay for company-wide peace of mind? Where do you get bargains like that?
jh
Oh that’s an easy one:
– They are rich, narcissistic turds with no concern for anyone but themselves and their fellow plutocrats
– Roosevelt enacted it, therefore it is a pinko program designed to benefit people other than the rich and thus, is vewy, vewy, bad
– Did I mention they are rich narcissistic turds?
RSA
I don’t think old Republicans, at least your average everyday Republicans, hate social security. On the other hand, I do know retired conservatives who think they’ve earned every penny they’re getting “back” in social security, but think that everyone else is taking advantage of the system.
ThymeZone
Go back and read the CATO papers on this from 20-25 years ago, including the ones that spell out it detail the scam that GWB tried to pull two years ago, which is still CATO’s preferred scheme to get rid of the program.
It’s simple: They want the revenue flowing into private coffers. The idea that those “gummint file cabinets” hold, not “useless pieces of paper” as Bush tried to call them, but basically notes promising billions to non-private streams, is more than they can bear. They want to shift those billions into a context where they can get their hands on them, and they will tell you that it’s for your benefit.
To our credit, the harder Bush tried to sell the scheme, the lower its approval went. The man is now the anti-Midas. Whatever he touches turns to lead.
But anyway, don’t waste time trying to analyze why Republicans hate Social Security. It’s as simple as asking who controls the money.
Who got the big recent tax cuts? Do you see a pattern emerging here?
qwerty42
It does seem to be related to the New Deal. FDR, first as governor of NY then as President could generally run circles around much of his opposition. They were (and remained) pretty po’d about it. for years. Now, of course, most are either dead or collecting Social Security themselves, so they dropped out of that fight. But the idea they developed (i dunno, some sort of “creeping socialism” or something) lingered on and was eventually adopted by a later generation. Those of you who read “Catch-22” may recall that Major Major’s father believed that any form of government assistance except aid to farmers was creeping socialism. That would probably describe a lot of the thoughts of the 30’s among some groups.
josephdietrich
As I understand it, the only Republicans that hate Social Security are the ones who are paying into it currently and think that they will never need to draw on it. It seems to be quite in vogue with those who are “sucking at the teat,” so to speak.
Dug Jay
This is not that big a deal. In order to reduce or eliminate the indicated “accounting deficit” referred to, all the congress has to do is eliminate or scale back social security and medicare benefits. If this is done, then the projected liability diminishes or goes away entirely.
Bubblegum Tate
Because they can’t stand the idea of government helping anybody.
Rome Again
Oh hell, they just forgot to add a 1 and about nine zeros behind it, that’s all.
ThymeZone
That’s what the pimp to the base, to the voters.
For the powerful behind the GOP, it’s more like this:
To fix the latter, they have to sell you the former.
That simple.
Dulcie
– Because they hate America
– Because they have a book to sell
– They hate it for it’s freedom
Yeah, yeah, I know the last one is a stretch, but I wanted to get it all out of the way before Paul L. or BIRDZILLA arrived.
Tsulagi
$1.3 trillion? Holy fuck.
Well, you can’t say during six years of Republican “leadership” they weren’t able to multitask. They brought the same level of visionary intelligence and competence to bear on the economic health of the country as they did its national security and their nation building adventures.
Rome Again
Yup, silly little Republican supporters have no idea how badly they’re getting screwed the entire time. Ha! That’ll learn ’em!
Rome Again
I saw this coming months ago, and took the same attitude. I’m just going to try to enjoy what happiness I can find and not worry so much about it anymore.
ThymeZone
What’s really a mind blower is how they took the resentment against Civil Rights and turned it into a message that could get Southern poor people to basically vote against their own interests. Those poor bastards, and the 6000-year-old-earth crowd, actually think that dumping the only thing standing between them and old age poverty is a good idea because the thing they are dumping was dreamed up by Libruls.
This is truly one of the great political scams in history.
You have to give them props for pulling it off. And you have to wonder at the loyalty of their voters, who have been totally sold down the bayou.
chopper
what about those of us who’ve been drinking heavily from the start?
Krista
Blurgh — that’s seriously depressing. And the mind-boggling thing is that there are some out there who still think that the economy is just FAN-tastic.
Zifnab
Yea, gods. If you think they’ve fucked the nation, just look at the states they come from. The whole SS thing might baffle me, but I can tell you exactly why Republicans hate universal education. When you’ve got clusterfucks in the Texas State Congress, abysmal poverty in states like Alabama and Georgia, widescale corruption in Kentucky and Ohio, and general incompetence across the board, the only thing that amazes me is how a Republican from a Red State can get Blue Staters to take him seriously.
Sstarr
Ladies and gentlemen the budget deficit speaks for itself. It’s difficult to tell yet whether our creditors will consume us or merely enslave us. One thing is for certain: there is no stopping them. And I for one welcome our new Chinese overlords….
David
The real effect of using the same accounting rules as everyone else would be to remove Social Security from the general fund statements and put it on its own page. There, everyone could see that THERE IS NO DEFICIT in the SS fund.
Doing this would also show the true size of the deficit in the general fund, currently hidden by excess Social Security contributions. This is the fund that is supposed to be paid for by income and other, non-payroll, taxes — the same ones cut by the Bush administration and (ex)Congressman Chocola.
jg
Its dismissive to label these people incompetent.
grumpy realist
Well, we’ve got the nuts running the asylum now.
When 40% of Americans claim that they believe “Jesus will return” during their lifetimes, we’re not talking about a country that has a sensible cultural zeitgeist. We’re talking about a country that might as well lock everything up, hand over the keys to the Chinese, and start swimmin’ to Jerusalem, because that’s what the whole kaboodle will parcel out being in the end anyway.
ThymeZone
Get back, Satan! Gway, Debbil!
Tom Hilton
The real substance of the article is the last two paragraphs. This isn’t a general budget problem (except to the extent that Bush’s tax-shifting cut the revenue base) and it isn’t a Social Security problem; it’s a Medicare/Medicaid problem. Which means it’s actually a general health care cost problem (IIRC, non-Mediwhatever health care costs are increasing more rapidly than the Mediwhatever costs).
This article should prompt calls for a radical reform of the nation’s health care system. Instead, expect the usual wingnuts to call for Social Security privatization…
Zifnab
Yet, notice what issue will likely stand second only to Iraq in the ’08 election? The US Healthcare system. This is yet one more reason why Democrats have ’08 in the bag. While Republicans run around talking about surges and terrorists and higher taxes, Democrats will be lining up their ducks for a complete overhaul of the Medicare system. And with Republican credibility shot, I suspect Democrats will roll right over them in ’09 and ’10 now that Republicans can’t just swiftboat away ideas they don’t like.
Tulkinghorn
I’ll raise you Gerry Garcia and raise you with a Christopher Isherwood:
Leave you troubles outside!
So – life is disappointing? Forget it!
We have no troubles here! Here life is beautiful…
The girls are beautiful…
Even the orchestra is beautiful!
sglover
Chocola was one of the great Republican enablers. That fuckwit has even more gall than the typical GOP vermin, complaining about hemorhaging budgets.
The Other Steve
Wait a minute. I’m all for better accounting principles and such.
But I’m not going to trust Count Chocola at face value on this issue. He got tossed out of Congress last year because he was a enabler of bad government.
rachel
Now Chris Chocola is “pushing for more accurate federal accounting”? Hmmm… I wonder what changed since he was in office.
BTW John, haven’t you listened to these sanctimonious agenda-floggers for long enough?
Disinterested Observer
This approach does tend to make the problem appear worse than it actually is.
The essence of this is the statement that “This hidden debt is the amount taxpayers would have to pay immediately to cover government’s financial obligations.” That is, if governments wanted to abolish all future social security payments and civil service pensions by paying people now for all their accrued entitlements, then this is how much you would have to stump up.
Now apart from the fact that this would be a pretty stupid thing to do, another factor is that some of the people who would have to pay out money would also get rather large amounts of cash in return – all their future pension entitlements.
Another issue is that government has one big capacity that private businesses don’t have – that is, the power to tax.
I think that a more sensible way to think about this is on the basis of how much do you need to spend each year and how much is needed to be collected in taxes.
Now because the population is ageing this is going to increase over the next 40 years or so.
As pointed out, at the moment social security is in surplus – people are paying in more than is being paid out. So the deficit in the rest of government is actually worse than it appears to be.
Some people argue that there isn’t a real problem with social security because slighty better economic growth than is assumed in the projections would continue to mean that the system is sustainable. Even if this view is over-optimistic, you could keep social security solvent by relatively minor adjustments on a number of fronts – push up the retirement age by a year, increase payroll taxes a little, shave benefits by a minor amount for the rich. (Doing a number of things like this is probably better than just relying on one approach.)
But health care costs are a problem – the US already spends more on health care as a % of GDP than anywhere else in the world, so working out how to control health cost inflation would be a good idea.
ChristieS
Budget. Real people call that a household budget. As for Social Security shortfalls, well here’s my take on it. For approximately thirty years beginning by 2020 at the latest, SS fund is going to start putting out a bit more than it takes in. HOWEVER…the point that Republicans never seem to mention…all these baby boomers WILL die and cease to be a drain on the system.
I was born in 1963. I’m damned near the very tail end of the Baby Boom era. I’m 44 right now, which means that the first wave of Boomers is approaching “retirement age.” Guys and gals, what are the statistics for people living to 100 again?
By the time *I* reach retirement age, most of the first wave of Boomers will be dead or really close to it. By the time that *I* reach 80 or so, the biggest portion of the wave is dead.
So, by my admittedly non-scientific calculations, the SS “crisis” should self-correct by about 2050 or so. It ain’t going broke unless we were faced with a negative population growth which would need to have begun during the 1980s.
Mr. Svinlesha
Buzzzt! Sorry!
Hell in a Bucket is a Bobby song, not a Jerry song.
Anyway, ’tis good to see they’re gone but not forgotten.
Shabbazz
John Cole is a Bobby fan! That explains everything!! (har har har)