January 05, 2012
At 254 pages, the “2011 Financial Report of
the U.S. Government” won’t be perused by more than a handful of Americans.
Too bad. If just a few million taxpayers gave the document the
time is deserves, the wilting
tea-party movement would receive a much-needed injection of volunteers and donations.
Released on a Friday, and two days before Christmas -- smart PR tactic
-- the report closes the books on the federal government’s fiscal year that was.
(FY2011 ended on September 30.) In an introductory message, Treasury Secretary
Timothy Geithner, whose department is tasked with publishing Washington’s annual balance sheet, called it
“another sobering picture of our long-term fiscal challenges.”
The secretary, politically motivated as any cabinet appointee,
wasn’t willing to acknowledge that the short-term
view isn’t encouraging, either. In FY2011, our profligate fedpols ran a deficit
of $1.299 trillion, nearly unchanged from FY2010’s gap. Not one of Uncle Sucker’s
35 “significant reporting entities” has been eliminated during the “austerity”
of the Great Recession. The Department of Agriculture, Department of Commerce,
Department of Education, Department of Energy, Small Business Administration,
and National Aeronautics and Space Administration are still in operation.
Neither the U.S. Postal Service nor the Tennessee Valley Authority have been
privatized. Even the small fry -- e.g., the Marine Mammal Commission, Barry
Goldwater Scholarship and Excellence in Education Foundation, Corporation for
National and Community Service, African Development Foundation, Eisenhower
Exchange Fellowship Program, Patient Centered Outcomes Research Trust Fund, Japan-United
States Friendship Commission, Ronald
Reagan Centennial Commission, Office of the Federal Coordination for Alaska
Natural Gas Transportation Projects, Open World Leadership Center, and Morris
K. Udall Scholarship Foundation -- remain sacrosanct.
But Geithner’s not wrong about the future. FY2011 saw “publicly held
debt” hit $10.2 trillion. A further $5.8 trillion was owed to nonmilitary employees
and veterans for retirement benefits. Tack on another $4.7 trillion for “intragovernmental
debt,” which “arises when one part of the Government borrows from another.” This
unique obligation takes the form of “special nonmarketable securities” deposited
in “trust funds.” Such “investments” are “both liabilities of the Treasury and
assets of the Government.” (Yes, you’re correct: That doesn’t make even a
smattering of sense.) Washington’s
also on the hook for its longstanding loan-guarantee programs, as well as the breathtakingly
dunderheaded corporatist schemes launched since 2008’s economic meltdown. And the
military-industrial complex isn’t exactly sure what the cost will be to remediate
environmentally contaminated installations and equipment.
Where we are is scary. Where we’re going is terrifying. Driven
by nationalized pensions and the federal government’s ongoing destruction of a
once well-functioning healthcare marketplace, the bill for unfunded liabilities
has risen to an almost incomprehensible figure. Simply put, the welfare
programs for the elderly that Boobus americanus
considers to be “insurance” are outrageously unaffordable.
Wonks call it the “fiscal gap,” and it’s the difference between
revenue and expenditures over a 75-year period. As of January 1, 2011, the burden
for Social Security and Medicare was $34
trillion. Treasury admits that the sum is “an increase of approximately $3
trillion” over 2010’s estimate. Absent dramatic reforms, the welfare state will
consume an ever-greater share of the economy. Remember: Old people vote. With
insufficient tax revenue to transfer to the greedy-geezer lobby, borrowing will
balloon. Publicly held debt will swell to 287
percent of GDP in 2086 -- a share that will make Greece
in 2012 look like America
during the Coolidge administration.
A final note about Treasury’s horror show. For the 15th year in a row, it failed to meet the standards of the
Government Accountability Office. The GAO provides investigative services to
Congress, and is legally bound to audit D.C.’s books. What did the legislative
branch’s green-eyeshade watchdogs conclude about FY2011’s numbers? Due to an
“inability to demonstrate the reliability of significant portions of the U.S.
government’s … accrual-based consolidated financial statements … principally
resulting from limitations related to certain material weaknesses in internal
control over financial reporting and other limitations on the scope of our
work, we are unable to, and do not, express an opinion on such accrual-based
consolidated financial statements.”
Incompetence piled atop incompetence. The federal government cannot
accurately itemize its insolvency.
The solution to all these problems -- short-term debt, long-term
obligations, woefully unacceptable transparency and accountability -- is to
restore the kind of tightly constrained central government that befits a nation
of free men.
It’s a right-sizing that’s politically impossible today. But
each year will bring another dense report that further depicts America’s
inevitable fiscal Armageddon. It’s obvious that fedpols don’t read them.
Perhaps taxpayers will start.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
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