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A fiscal house of cards

Wow! Talk about an Excedrin headache — the news that each U.S. household’s share of the national debt is now at $516,348. Oh, and that’s in addition to the average household’s personal debt of $112,043.

Go ahead, take several Excedrins.

An analysis by Dennis Cauchon in the newspaper USA Today showed, when adjusting for all the government’s accounting subterfuges, our fiscally profligate Uncle Sammy piled up a $1.3 trillion loss last year. That boosted the total government liability to $59.1 trillion, of which your pro rata share is half a mill-plus.

Of that, Cauchon notes, a whopping 85 percent represents unfunded promises for Social Security, Medicare, and other federal retirement programs.

And those costs are escalating, which means you’ll be on the hook for even more.

To pay off all this debt would require “immediate and permanent” massive increases in federal taxes, or massive cuts in those program benefits, or a combination thereof.

More Excedrin?

David Walker, who is U.S. Comptroller General —the country’s top accountant — and head of the Government Accounting Office, has for some time been urging people to “wake up before it’s too late” and insist that the government start getting its financial house in order.

On a “fiscal wakeup tour” around the country, he’s told everyone who’ll listen that “we’re expecting our grandchildren to pay for this, and that’s absolutely outrageous.”

If the “fiscal cancer” isn’t treated, Walker says, “it could have catastrophic consequences for our country.”

If a private company posted such a dismal financial record, he says,” it would be on the front page of every newspaper in the country.” But because it’s the government, and because it has been spending far more than it takes in for so long, it’s just another ho-hum story.

The USA Today article notes that the federal government doesn’t follow modern accounting practices required of corporations and state/local governments, under which expenses are counted immediately when a transaction occurs, even if payment will be made later. Thus, promises for Social Security, Medicare, and other entitlement programs aren’t reflected when the government reports its financial condition.

(Compared to that Mt. Everest of debt, farm program expenditures that so offend urbanites and anti-ag groups are a mere speck on the ledger.)

The Financial Accounting Standards Advisory Board wants to require the government to use accounting rules similar to those of corporations, but the White House and the Congressional Budget Office are opposed.

By 2040, David Walker says, “based on reasonable assumptions, the U.S. government may be doing nothing more than making payments on its massive debt.”

This fiscal house of cards is further camouflaged by the massive amount of our debt now in the hands of foreigners — some 80 percent of 3- to 10-year U.S. Treasury notes, the highest level since the 19th century.

If China, Japan, and other countries that are helping to finance our deficit spending should decide to start putting their money elsewhere, Walker says, it could send interest rates skyward “and have a domino effect on the economy.”

A couple of belts of scotch to go with your Excedrin?


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