The real 2007 federal budget deficit was $4 trillion, not a previously reported $163 billion, an economist contends, based on data from the Treasury Department’s annual financial report.
“The federal government’s fiscal woes continue to careen wildly out of control,” said economist John Williams, who publishes the Internet website Shadow Government Statistics.
Williams explained that the difference between the official budget deficit and his number is that the official figure is calculated on a cash basis, where all tax receipts, including Social Security receipts, are used to pay government liabilities as they occur.
Williams bases his figure on the Treasury Department’s “2007 Financial Report of the United States Government,” released Dec. 15.
The calculations in the annual report are calculated on a GAAP basis – Generally Accepted Accounting Practices – that includes year-for-year changes in the net present value of unfunded liabilities in social insurance programs such as Social Security and Medicare.
Under cash accounting, the government makes no provision for future Social Security and Medicare benefits in the year in which those benefits accrue.
“Truthfully, there is no Social Security ‘lock-box.’ There are no funds held in reserve today for Social Security and Medicare obligations that are earned each year,” Williams pointed out.
“It’s only a matter of time until the public realizes that the government is truly bankrupt and no taxes are being held in reserve to pay in the future the Social Security and Medicare benefits taxpayers are earning today.”
Calculations from the 2007 report also show that the GAAP negative net worth of the federal government has increased to $54.3 trillion, while the total federal obligations under GAAP accounting now total $59.8 trillion.
“Social Security and Medicare must be shown as liabilities on the federal balance sheet in the year they accrue,” Williams argued. “To do otherwise is irresponsible, nothing more than an attempt to hide the painful truth from the American public.
“The public has a right to know just how bad off the federal government budget deficit situation really is, especially since the situation is rapidly spinning out of control,” he said.
Williams explained to WND the federal government is “bankrupt.”
“In a post-Enron world, if the federal government were a corporation such as General Motors, the president and senior Treasury officers would be in federal penitentiary,” he said.
Williams noted that the 2007 report utilized several one-time accounting adjustments calculated to make the numbers look less severe.
In his subscription newsletter, Williams reported the government’s figures according to the standards previously used, discounting the one-time adjustments.
In a letter included in the 2007 Financial Report of the United States Government, David M. Walker, the U.S. comptroller general, once again refused to certify or render an opinion on the consolidated financial statements contained in the report, noting “the federal government’s inability to demonstrate the reliability of significant portions of the U.S. government’s accompanying accrual basis consolidated financial statements for fiscal years 2007 and 2006.”
In his letter, Walker also noted the first wave of the baby boom generation has begun to leave the work force and file for retirement benefits.
Walker observed the budget and economic implications “will only intensify as the baby boomers age,” resulting in the dire consequence “that our nation is on an imprudent and unsustainable long-term fiscal path that is getting worse with the passage of time.”
“That’s an understatement,” Williams said. “What the comptroller of the United States is telling us is that as bad as a $4 trillion federal budget deficit and a $54.3 trillion GAAP negative net worth is, the situation with the federal budget deficit is only going to get worse as the baby boomers retire and demand retirement services, including Social Security and Medicare payments.”
For a comprehensive look at the U.S. government’s plan to integrate the U.S., Mexico and Canada into a North American super-state – guided by the powerful but secretive Council on Foreign Relations – read “PREMEDITATED MERGER,” a special edition of WND’s acclaimed monthly Whistleblower magazine.
Editor’s note: The November issue of WND’s monthly Whistleblower magazine, titled “HOW GLOBALISM IS DESTROYING THE U.S. ECONOMY” – focuses exclusively on the future of the U.S. economy, and answers key questions like: “If inflation is so low, how come food and energy cost so much?” “What is the ‘housing bubble,’ and why did it burst?” “What’s really going on with the stock market?” “Is America heading into a recession?” “Will the dollar collapse in 2008?” and “What will happen to the price of gold?”