WASHINGTON—America’s current national debt stands at roughly $23.3 trillion, according to the U.S. Treasury Department’s nifty “Debt to the Penny” website, which is so precise that visitors can pick a specific date in the recent past—say Jan. 1, 2000—and get the exact amount on that day: $5,776,091,314,225.33.
While based on those figures, the national debt has more than quadrupled in that time frame, according to calculations by Bill Bergman, it’s actually much worse than that.
“This calculation highlights some of the pitfalls and perils of false precision,” Bergman, the director of research for the Chicago-based nonprofit advocacy group Truth in Accounting (TIA), said in a recent interview with The Epoch Times.
“The U.S. government does not include the unfunded obligations for Social Security and Medicare under current law. These massive negative positions are so high that Truth in Accounting believes the ‘true’ national debt runs north of $100 trillion,” Bergman said.
$122,309,089,510,200, to be exact.
Because future obligations aren’t included in current-year accounting, a government budget can technically be “balanced” when, in truth, it’s anything but.
That’s because those unfunded obligations under Social Security and Medicare are benefits the government has promised to pay future beneficiaries, but for which there currently exists no dedicated funding.
The yawning gap between the Treasury Department’s calculation of the national debt and TIA’s reflects how the federal government keeps its books.
“How does the U.S. government justify not counting these obligations as debts? The reasoning has been that the government controls the law, and can change it at any time,” Bergman said.
“We at TIA don’t believe sound accounting allows for this degree of discretion. As long as current law is current law, the government should record these debts, and behave accordingly,” he said.
But that’s not all.
Bergman said that “a true national debt running almost five times as high as the reported debt may suggest deception is at work,” but federal accounting “also calls Social Security and Medicare ‘entitlement’ programs, and [for annual budgeting purposes] calls entitlement expenditures ‘mandatory’ spending.’”
In other words, officials can spend less now and save the difference, raise taxes now for future spending, or hope the economy keeps growing and generates added revenues and budget surpluses down the road.
Federal officials know these options well, they even allude to them on the annual Social Security statement future beneficiaries get in the mail: “Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time.”
The annual trustees for Social Security and Medicare also issue annual reports that acknowledge the spiraling benefits and project the years when each system will be unable to pay promised benefits based on current assets if Congress continues to ignore the problem.
The problem of misleading accounting isn’t unique to the federal government; it’s widespread at the state and levels as well, according to TIA President Sheila Weinberg.
“While governments’ consolidated or government-wide statements are prepared on an accrual basis, the general and other budgeted funds statements are prepared using the ‘modified accrual basis,’ which loosely resembles the cash basis. These two sets of books lead to misleading and contradictory financial information,” Weinberg recently told The Epoch Times.
Neither set of books includes the unfunded obligations.
“Of course, government officials often point to the financial data from the fund statements, which leave out long-term liabilities and all the expenses incurred, because these statements make their financial conditions and budgets look better,” she said.
Weinberg pointed to New York City under former Democratic presidential aspirant Mayor Bill de Blasio, saying “for fiscal year 2018, New York City claimed a $4.6 billion surplus, but that was achieved by not including $4.9 billions of earned and incurred compensation costs related to retiree health care benefits.
“New York City used some of its $4.6 billion surplus for additional spending, even though its pension plans were unfunded by $51 billion and the city needs $106 billion to pay for retiree health care benefits that have already been earned. The city’s government-wide statements reported a $3.2 deficit for the year,” Weinberg continued.
The problem at the state and local levels is that officials rely on standards issued by the Governmental Accounting Standards Board (GASB), a private entity established in 1984.
“The board is made up of mostly current or former government officials and others who may have a vested interest in the standards they set,” Weinberg said. “GASB is currently deliberating about changing the standard that requires these two sets of books, but is leaning toward maintaining the status quo.”
The GASB’s lean may be in for a rough ride because the obscure board is attracting notice in Congress, because of Rep. Brad Sherman (D-Calif.), chairman of a key House Committee on Financial Services subcommittee.
“For FASB to exercise that much government power in what is a separate cloister is as far away from democracy as they can possibly get,” Sherman reportedly said earlier this month.
Contact Mark Tapscott at [email protected]