Saturday, May 10, 2008

GAAP Accounting

During the past 25 years or so Social Security has piled up a huge surplus. as it was supposed to do.

But, everyone who sat in the White House during those years have proposed federal budgets that stole from the surplus in order to hide the real size of the current federal budget deficit. These slick moves allowed those presidents - and their pals in Congress that approve the budgets - to spend more and justify tax cuts for the wealthy.

The US Office of Management and Budget says that between 2002 and 2006 while the US government's reported deficit averaged about $300 billion a year - about $4,000 per household - the real deficit was actually more than 50% larger.

The government shrunk that deficit with some chicanery by reaching under the table to borrow about $165 billion a year from the Social Security Trust Fund.

In 2007, the real deficit was $449 billion, according to the OMB. However, the "official" widely reported deficit was only $257 billion.

That's because it's government policy to add the borrowed Social Security Trust Fund surplus ($192 billion in 2007) to revenues before calculating the "official" deficit that has to be borrowed publicly.

And here's a bee-ute. US leaders in Washington claim that the recently passed $160-billion economic stimulus package will only raise the 2008 official deficit to about $400 billion. Add in the annual theft from the Social Security Trust Fund and the real deficit in 2008 will be about $600 billion.

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