Two US Government Financial Whoppers

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Recently US Government’s General Accounting Office (GAO) gave us a financial report that contained two financial “whoppers." In the US Financial Report for Fiscal 2014 (released 2/26/15 - see here), the two whoppers were:

Whopper # 1:  Government’s “debt" was only $17.1 trillion (instead of $100+ trillion).

Government said its “debt” was only $17.1 trillion by hiding the largest portion of its true debt: future promises under social programs such as Social Security, Medicare, and Medicaid. In Footnote 24 to its financial report, the GAO discloses that the future excess of these long-term liabilities over expected collections is $83.8 trillion. Adding these liabilities to government's stated “debt” gives true government liabilities of over $100 trillion.

Whopper # 2:  Government’s "federal deficit" for the year was only $0.5 trillion (instead of $4.9+ trillion).

Government says its “federal deficit” was only $0.5 trillion because it refuses to transparently disclose its increased liability during fiscal 2014 for social program guarantees (listed above). In the GAO's “Reconciliation of Net Operating Costs and Unified Budget” (page 48), this 2014 liability grew $4.4 trillion during the fiscal year. This increased the true “federal deficit" from $0.5 trillion to over $4.9 trillion.

Government gets away these these whoppers by using deceptive disclosures that are illegal for publicly traded companies. These firms must report under one of two clear standards - either Business GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards). But had government been required to report under either of these two standards its debt (liabilities) would have exceeded $100 trillion (instead of $17.1 trillion), and its federal deficit (loss) would have exceeded $4.9 trillion (instead of $0.5 trillion). 

Government's deceptive disclosure prevents citizens, as well as the media and politicians, from understanding and addressing government's true long-term financial problems. Instead, such deception lets our unaccountable government waste our money and compromise our futures, without external citizen oversight.

TransGov’s mission is to make government accountable to citizens under the same "Generally Accepted Accounting Principles” that businesses must follow.