The U.S. Census Bureau released its annual Federal Funds report and the 24/7WallSt web site has done a pictorial analysis of the charts in the report that is a bit more illustrative of the distribution of government funds than the charts in the Census Bureau report. This long holiday weekend, we can all have fun finding how much per capita our state gets from the Feds.
David Walker, the former Comptroller under the Bush administration, criticized the accounting methods of the U.S. government, which uses a cash accounting system just like a small lawn mowing company does. As such, the government shows Social Security taxes as income and Social Security payments as expenses. This distorts the true fiscal health of this country – a benefit for elected politicians who would prefer that their constituents not know the true picture.
2 thoughts on “Gimme Money”
So what is the true picture? Especially vis-a-vis Social Security?
The Social Security trust fund has a balance of $2.6 trillion in Federal I.O.U.s, according to the SSA (http://www.ssa.gov/OACT/ProgData/assets.html) To put that in perspective, the Feds owe China $843 billion, Japan $803B, and the U.K., oil exporters and Caribbean banks another $760B. (Source: http://www.ustreas.gov/tic/mfh.txt) The SS trust fund is the largest holder of U.S. debt, yet the trust fund can't sell any part of that debt to a third party. It will take an act of Congress to change that. In the beginning, the trust fund held marketable security reserves, just as an insurance company does. But politicians of both parties were too reckless to let that go on for long. Over the next decade, retiring boomers, who built up the trust fund with their taxes, will start getting their money back. The U.S. Treasury will then have to borrow the money from other countries, sovereign investment funds and the private sector to pay back the money it owes to the trust fund. A responsible Congress would raise taxes to pay down some of this debt to both foreign countries and the trust fund. The Republican party has lost all sense of responsibility when the subject is taxes and the Democrats are too busy trying to achieve social justice with their tax policies.
Reagan set the precedent for the Republicans: spend, spend, spend on defense and charge it to the taxpayer's credit card.
Johnson set the precedent for the Democrats: spend, spend, spend on social programs and do some accounting tricks so that the voters won't notice that the expense is being charged to the national credit card.
Both parties are broken – they have unworkable and unrealistic theories of governing and economic reality.