2006/08/03

"If you want a prettier picture, bring me a prettier face"

There's a pretty good article in today's USA Today on how the US Government tries to hide how much of our money they overspend and obligate us to pay. My post title comes from the end of the article:

Tom Allen, who will become the chairman of the federal accounting board in December, says sound accounting principles require that financial statements reflect the economic value of an obligation.

“It's hard to argue that there's no economic substance to the promises made for Social Security and Medicare,” he says.

Social Security and Medicare should be reflected in the bottom line because that's the most important number in any financial report, Allen says.

“The point of the number is to tell the public: Did the government's financial condition improve or deteriorate over the last year?” he says.

If you count Social Security and Medicare, the federal government's financial health got $3.5 trillion worse last year.

Rep. Mike Conaway, R-Texas, a certified public accountant, says the numbers reported under accrual accounting give an accurate picture of the government's condition. “An old photographer's adage says, ‘If you want a prettier picture, bring me a prettier face,' ” he says.

Harry Binswanger has long made the point that tax cuts are a secondary concern and the primary goal should be to cut government spending. Taxes are only one way that our government loots us; the other two are borrowing and inflation, so lowering taxes without first cutting spending just changes the form of that looting. [Also recommended is his article on why there would be no "Transition Costs" in privatizing Social Security.]

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