US 2006 Financial statements - Political Forum

george.d · 12-26-2006, 08:04 PM

The Treasury and the Office of Management and Budget quietly released the annual report titled Financial Report of the US Government:

http://fms.treas.gov/fr/06frusg/06frusg.pdf

This is what would be considered 2006 year end financials for the US Government. I don't know how many posters here follow US economics, but any private sector business person reporting these financials would be seeking a tall building to jump from to avoid prison. Mainstream media never reports on this annual financial report, nor does Wall Street. Advertiser products are not sold by news that will disturb consumer confidence.

Some of the interesting parts are:

"it seems clear that the nation’s current fiscal path is unsustainable and that tough choices by the President and the Congress are necessary in order to address the nation’s large and growing long-term fiscal imbalance."

~Other fiscal exposures continue to grow and now total approximately $50 trillion, representing approximately four times the Nation’s total output (GDP) in fiscal year 2006, up from about $20 trillion, or two times GDP in fiscal year 2000.~

It's about a 20-minute read, the first time, and I'd be curious as to how posters react to what they read and what US leadership tells the public. If you rely on cooked GDP, unemployment, debt and other government numbers for information, it will piss you off and should prompt an interesting discussion.

Tumbleweed · 12-26-2006, 08:38 PM

My first impression. They are trying to dazzel us with bullshit.

I follow the deficit and deficit spending enough to know the numbers don't match the records levels I've been reading about.

I didn't read the whole thing but it sounds like a political statement. "Everything is under control" folks speech.

I'm curious to know how far off the numbers are.I have to dust of my favorites.

I loved those 75 year projections too.

george.d · 12-26-2006, 09:27 PM

Quote:

Originally Posted by W.E.B. Du Bois

I made a post about a report released by an official from the Government Accountability Office (GAO). It was pretty grim and it showed how the US government deficit was going to grow, due to our failure to fix our budget deficit, social security and the growth in health care costs.

I probably need to read this report though as well.

This is the official US government audit, released every year. This one is very grim and they've annually become increasingly negative at an astounding rate.

In the private sector when the auditors won't sign off on your audit for material plugs, omissions and operating entities not even bothering to report for purposes of consolidation, one is effectively out of business. GAO, as usual, did not sign off on this one.

Read this report and think about the future viability of 401k plans loaded up with equity investments based on consumer consumption and sub-prime bonds from Fanny and Ginny Mae based on the housing bubble.

Incidentally, the publicized annual deficit, like GDP and most general public numbers, are other threads.

george.d · 12-26-2006, 09:34 PM

Quote:

Originally Posted by Tumbleweed

My first impression. They are trying to dazzel us with bullshit.

I follow the deficit and deficit spending enough to know the numbers don't match the records levels I've been reading about.

I didn't read the whole thing but it sounds like a political statement. "Everything is under control" folks speech.

I'm curious to know how far off the numbers are.I have to dust of my favorites.

I loved those 75 year projections too.

The numbers aren't all that important. That's all they have and state the gross omissions. Read the footnotes and audit statement. It ain't BS and it ain't good for the US. That's why it receives no administration and/or mainstream media attention. We're in serious financial trouble.

Tumbleweed · 12-26-2006, 09:42 PM

I knew I'd have to read the whole thing.

Tumbleweed · 12-26-2006, 09:56 PM

I didn't make it to page 31 the frirst time .

I see what you mean.So why can't this be reported, for the 10th year in a row by the GAO? That seems odd.If I read that right the report isn't being allowed because it reveals all the inacuricies in the financial statements released by the government.

george.d · 12-27-2006, 09:58 AM

Quote:

Originally Posted by W.E.B. Du Bois

Not quite sure I understood the above. You are saying that the government often will not let give some private companies credit for business-related expenses, and treats them as profits?

No. In the private sector when a company has incomplete and/or shoddy financial reporting and receives an audit report declining comment, it means the auditors haven't approved the company's financial reporting. That would mean bank revolving credit lines (what the company operates on while waiting for receivables to be collected) would be withdrawn (always on an annual renewal basis for that very reason) and the company would effectively be out of business. It's known as outside auditors signing off on the annual report and no company can borrow money or incur payables without it.

The US government has incomplete and shoddy financial reporting, this is the ninth year in a row the comptroller general has refused comment, but the US government keeps borrowing money and incurring fiscal exposure without that approval. Simply put, US government accounting, debt and public trust funds are so screwed up nobody, including GAO, will touch it with a 10' pole.

george.d · 12-27-2006, 10:16 AM

Quote:

Originally Posted by W.E.B. Du Bois

How come the projected deficit rises so rapidly every year?

Due to the retiring baby boom generation, I guess.

SS and Medicare are public trusts, deposits made from employee and employer contributions. Each year the federal government SS administration pays current claims and the remainder of collections are 'banked' for future claims. Since roughly the Reagan Administration, collections beyond future claims have been borrowed by the federal government, who issues non-trading government securities for the 'surplus' collections. With Bush2 they take everything not paid out. That 'surplus is then put in the general fund to reduce deficits as reported to the public.

Pretty slick? Anyone running a private company would end up in the slammer for that.

The deficits accelerate because the trust is emptied each year, SS COLA increases (the largest voting block), increases in baby boomer retirement and primarily because Medicare is also used for Medicaid, the primary US social net for those unable to afford primary health care.

Tumbleweed · 12-27-2006, 10:28 AM

The GAO paints a grim picture. This material weakness they referred was mentioned in every footnote or comment throughout the report. I saw unsustainable mentioned a few times too.

The private sector executives would more than likely be under indictment for these accounting practices.

george.d · 12-27-2006, 10:31 AM

Quote:

Originally Posted by W.E.B. Du Bois

I think the crux of this article is in the first few pages and can be summed up in these two charts (and the charts in the end, which all basically say the same thing: growing social security and medicare crises).

As a historian, I find Chart 1 very confusing. Why is it that even so far in the future does the worker:beneficiary ratio stay so low? Is it because our birth rate declined and people are living longer or something? It's a 2:1 ratio.

SS and Medicare are only part of the problem. Medicare, with current administration's yet unfunded prescription drug program (the largest US entitlement program to date) and national health care in the form of Medicaid will be an 800lb gorilla. Even more pressing is the transfer of wealth from the US in abnormal payment imbalance, acceleration of debt and subsequent debt service and our already bloated military expenditures. We have severe cash flow problems and there's zero accountability as testified to by the report.

This report doesn't even touch monetary inflation due to petrodollars, another subject.