Time for budgetary truth
Originally Posted At The Washington Times
By Joseph J. DioGuardi
August 24, 2009
According to recent CBS/New York Times and NBC/Wall Street Journal polls, public concerns over super-sized federal deficits and the increasing national debt are overtaking concerns over our failing economy.
In 1980, our national debt stood at about $800 billion, accumulated over 200 years. In less than three decades, that debt has increased twelvefold. The national debt will exceed $11 trillion in 2010, and is projected to exceed $20 trillion by 2020. (Even if interest rates stayed at around 5 percent, the annual interest on the national debt alone will be well more than $1 trillion in 10 years.) And this does not include the big problem we face, which is the estimated $45 trillion in unrecorded and unfunded liabilities, primarily for Social Security and Medicare -- a number that seems to disappear whenever we focus on the annual deficit and national debt.
Worse still, we are being left hostage to countries like China -- which currently is owed the largest portion of our $2 trillion debt to foreign nations -- that clearly do not share American values.
And, when you examine the real numbers, the reality is beyond dire. There is a $56 trillion hole, and counting, in our nation's finances, not the $11 trillion national debt that is widely publicized and reported on the federal government's balance sheet. Lost in all the outrage over the fast-rising federal deficits and national debt is something that every certified public accountant knows and virtually all politicians do not like to acknowledge -- that the financial management failures of U.S. corporations cannot come close to rivaling the budget and bookkeeping shambles of the U.S. government. At the federal level, there are myriad off-budget gimmicks, unrecorded liabilities, and financial manipulations on a scale that would put many executives of publicly traded companies in prison for securities fraud.
In my view, therein lies the foundation of America's budget and accounting fiasco today -- a double standard that enables the Congress and the president to fudge the real numbers and collectively misrepresent the financial condition of the U.S. government.
It is past time to restore integrity to the budget process. The "unified budget," which was implemented under President Lyndon Johnson, reputedly to disguise the real cost of the Vietnam War, must be done away with. By offsetting annual surpluses in the so-called Trust fund accounts, like Social Security, against the deficit from all other annual government operations and activities, we grossly underreport the U.S. annual deficit. This allows for a "Ponzi scheme" on a grand scale against unrepresented future generations.
And the budget reforms that followed the misguided and unfair "unified budget," like the 1984 "Gramm-Rudman Deficit Reduction Act" and the 1990 "Budget Enforcement Act" (that tried to implement a pay-as-you-go-mechanism), have all failed to contain federal deficit spending and to balance the budget. The Founders should have provided a balanced budget requirement in our Constitution. But they did not.
Deficit reduction and effective fiscal management require a sound budgeting process and fair and objective accounting and reporting standards. But, most of all, they require political will. Congress, driven by its primary motivation for re-election, makes the situation worse by deferring meaningful reform.
Everyone in Washington decries the federal deficit, but no one there seems to have any real plan or intention to solve it. Leadership is lacking from CPAs and those with the financial expertise (like certified management accountants and other financial professionals). They should rise up as informed citizens to persuade Congress to straighten out our government's fiscal policies and financial records, and to lead America to an economically sustainable future.
The most important financial reform would be to convert the current cash basis accounting system, used in the federal budgeting and bookkeeping process today, to the system of "generally accepted accounting principles." GAAP is required of public corporations by the Securities and Exchange Commission, not to mention all 50 states and 84,000 local governments, to protect future generations from being unfairly burdened by the excess (and disguised) spending of the current generation.
It is time to separate the promulgation of numbers -- i.e., the budget, accounting, and reporting process -- from politicians. A good place to begin to control federal spending would be to use GAAP to disclose all spending and all commitments to spend. Another would be to make the chief financial officer's function (as I proposed in 1986) a Cabinet-level position and remove financial management and reporting from the Treasury Department.
As a CPA and former member of Congress who served on both the House Government Operations and Banking Committees, and now as a volunteer public advocate for fiscal responsibility, I strongly believe we must require independence and objectivity in setting both monetary and fiscal policy to remove any political influence over our government's accounting, reporting, and auditing. In a July 16 New York Times commentary justifying the independence of the Federal Reserve System, Rob Cox and Richard Beales concluded that, to ensure effective monetary policy, the Fed should be removed from politics, because its decisions can be politically inconvenient. We need to do the same for fiscal policy by creating a new independent function, like the Fed, to implement a sound budgeting, accounting and reporting process. In this way, we can finally bring real accountability and transparency to America through a system of accounts and financial reports built on fairness, independence and objectivity -- hopefully devoid of conflicts of interest.
Joseph J. DioGuardi, a certified public accountant and former two-term Republican member of the U.S. House of Representatives from New York (1985-89), is a public advocate for fiscal responsibility as the leader of Truth In Government, a nonpartisan, nonprofit organization.
|
|
Urgent Petition
|
Sign the petition to stop Social Security Cuts and send a fax to every Member of Congress demanding they cut other spending, NOT SOCIAL SECURITY.
Share This Petition
|
Recent News
Friday, May 18, 2012
Congressional Republicans are back up to their old shenanigans on ObamaCare. Politico reveals that Republicans would try to replicate popular parts of Obama’s health care law if the Supreme Court overturns the law this summer.
Read Full Story
Tuesday, May 15, 2012
Source: ABC News
The Food and Drug Administration has warned doctors to watch for fractures of the upper thigh bone in patients taking several popular drugs designed to prevent hip fractures and fight osteoprothesis. The FDA warns that Fosamax and Boniva in particular, if taken unnecessarily or for too long, may actually be causing the bone fractures they are prescribed to prevent. Watch ABC News video.
Read Full Story
Thursday, May 17, 2012
 Exit Not An Option In Chuck Schumer's America. New York Senator Chuck Schumer has introduced the Fugitive Taxpayer Act of 2012 to re-impose taxes on expatriates after they flee the United States and take up residence in a foreign country. Proposal also would impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship and would bar such individuals from ever reentering the United States again.
Read Full Story
Wednesday, May 16, 2012
Whether President Obama gets his second term or Romney enters the Oval Office, there’s a third candidate no one’s paying much attention to, and that candidate is guaranteed to be the one clear winner of election 2012: the U.S. military and our ever-surging national security state.
Read Full Story
Friday, May 11, 2012
According to the New York Federal Reserve, two million US seniors age 60 and over have student loan debt, on which they owe a collective $36.5 billion; and 11.2 percent of this debt is in default. 4.2 percent of all student loan debt is held by people over the age of 60, and that share grows with each passing year.
Read Full Story
Tuesday, May 15, 2012
Across the U.S. economy, anxiety is rising about the potential for widespread disruptions after the November election, when a lame-duck Congress will have barely two months to resolve a grinding standoff over taxes and spending.
Read Full Story
Thursday, May 10, 2012
Two-thirds of Republicans and nine in 10 Democrats polled support making immediate cuts to the military across the board -- a position at odds with the leaderships of both political parties.
Read Full Story
Monday, May 7, 2012
Video revealing the circumstances of how a mentally ill homeless man in Fullerton, Calif. died last July was finally published Monday, revealing a stunningly brutal police assault that left Kelly Thomas bleeding, broken and near death.
Read Full Story
Monday, May 7, 2012
The number of people with jobs declined for the second month in a row, falling by 169,000 in April after easing by 31,000 in March. This means that there were 200,000 fewer Americans with jobs in April than there were in February. Additionally, the percentage of working-age adults who either have jobs or are looking for work, fell to 63.6%, which is the lowest level since December 1981.
Read Full Story
Tuesday, April 24, 2012
In November 2010, a police lieutenant from Parma, Ohio, asked Vanguard Defense Industries if the Texas-based drone manufacturer could mount a “grenade launcher and/or 12-gauge shotgun” on its ShadowHawk drone for U.S. law enforcement agencies. The answer was yes.
Read Full Story
Read All Recent News
Get in the Know Now
Get SSI Email Alerts
Social Networks
Action Center
|
