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View Full Version : Real amount of new federal debt in 2010: $5.3T



LWW
06-08-2011, 06:31 AM
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<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">The federal government's financial condition deteriorated rapidly last year, far beyond the $1.5 trillion in new debt taken on to finance the budget deficit, a USA TODAY analysis shows.

The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.

This gap between spending commitments and revenue last year equals more than one-third of the nation's gross domestic product.

Medicare alone took on $1.8 trillion in new liabilities, more than the record deficit prompting heated debate between Congress and the White House over lifting the debt ceiling.

Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.

Corporations would be required to count these new liabilities when they are taken on and report a big loss to shareholders. Unlike businesses, however, Congress postpones recording spending commitments until it writes a check.
The $61.6 trillion in unfunded obligations amounts to $527,000 per household. That's more than five times what Americans have borrowed for everything else mortgages, car loans and other debt. It reflects the challenge as the number of retirees soars over the next 20 years and seniors try to collect on those spending promises.

"The (federal) debt only tells us what the government owes to the public. It doesn't take into account what's owed to seniors, veterans and retired employees," says accountant Sheila Weinberg, founder of the Institute for Truth in Accounting, a Chicago-based group that advocates better financial reporting. "Without accurate accounting, we can't make good decisions."

Michael Lind, policy director at the liberal New America Foundation's economic growth program, says there is no near-term crisis for federal retirement programs and that economic growth will make these programs more affordable.
"The false claim that Social Security and Medicare are about to bankrupt the United States has been repeated for decades by conservatives and libertarians who pretend that their ideological opposition to these successful and cost-effective programs is based on worries about the deficit," he says.

USA TODAY has calculated federal finances based on standard accounting rules since 2004 using data from the Medicare and Social Security annual reports and the little-known audited financial report of the federal government.

The government has promised pension and health benefits worth more than $700,000 per retired civil servant. The pension fund's key asset: federal IOUs. </div></div>

THIS (http://www.usatoday.com/news/washington/2011-06-06-us-owes-62-trillion-in-debt_n.htm?loc=interstitialskip) is where the O-cult blames Bush.

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pooltchr
06-08-2011, 07:32 AM
I will admit that I was not pleased when Obama was elected, but I took heart in my belief that one person really couldn't do a lot of damage in just 4 years.

It seems I was wrong.

Steve

Soflasnapper
06-08-2011, 06:29 PM
Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.


If you are blaming Obama for the additional costs associated with longer life expectancies, doesn't that require you credit him with causing those longer lives?

Otherwise, what did he have to do with it, in your view?

pooltchr
06-08-2011, 06:52 PM
The social security obligations were established long before Obama ever got in office. He is not responsible for them. He is however, responsible for managing government spending in order to be able effectively deal with that and other obligations we have. We can't just ignore it because people are living longer. (I guess nobody predicted that might happen when they established the program to begin with)

Our county did a property tax revaluation this year, and my property taxes will increase significantly. Can I just ignore it because the new tax rate isn't my fault? No, I have to make adjustments to compensate for it. Maybe playing less pool and saving the money I will need to pay that bill when it comes due.

How can you not hold our giverment to the same standards we as individuals have to meet?

Steve

LWW
06-09-2011, 03:38 AM
He is simply finding the exception and declaring it to be the rule which excuses the excesses of the democrook party.

Soflasnapper
06-09-2011, 02:35 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> (I guess nobody predicted that might happen when they established the program to begin with)</div></div>

Actually, SS actuaries knew about it and planned for it originally, only off by 1 year on their projection of increased life expectancies. This was also foreseen and a revisited matter by system actuaries in the Greenspan Commission fix.

Not to mention they also planned for the reduction in numbers of workers relative to recipients. Both of these alleged unforeseen problems were foreseen, and accounted for.

What this discussion has lacked so far is any understanding of how whacked the general principles of accounting under GAAP are, when they use accrual methods of accounting, instead of the more intuitive cash accounting basis.

We've recently had my company's financials restated in accrual method terms, and it results in many counterintuitive (I would say, false and misleading) revised figures.

For instance, it's typical on our many 5-year leases to have the landlord either charge zero early months' rents, or provide tenant improvement allowances for build-outs, sometimes both, which are received in the first year of the term of the lease.

On a cash accounting basis, we simply show a lower lease payment figure in the first year, and the full lease amounts being paid in the later years, as this is what actually happened. Makes sense.

Under accrual accounting, however, they take the position that we have to amortize out the free rent and/or paid-for TI allowance, over the term of the lease. Therefore, supposedly, we actually paid far more in the first year (even though we didn't), and paid less in the 2-5 years (although we didn't).

In terms of reflecting business realities of annual cash flows, the more realistic (in my view) cash accounting method is true, and the accrual accounting false, but GAAP disagrees.

Here's where the GAAP accounting fails to reflect reality for these alleged governmental debts and obligations as well. These are mainly not real obligations, as LWW usually notes when he says the government doesn't have to pay anyone SS as a legal right. These are not contract obligations, and they are subject to being changed in mid-stream down the road, including being entirely abjured, if it comes to it. That is entirely true for Medicare and SS, not sure if it's true or not for things like military or civilian pensions. But pension costs, while substantial, pale in significance when compared to the two 800-lb gorillas in the budget, the SS and MC systems. NONE of which are actually 'owed,' when talking about the future incurred obligations, which can be entirely revised and/or canceled altogether.

If you want to see a really large number, imagine the defense dept. budget added up over a 75-year time period. That, by itself, looks about as large as the alleged 75-year accumulation of debt obligations, and you know what? It's not even included. Nor is the continuation of so-called tax spending, which is this year as large as the entire deficit, more or less.

pooltchr
06-09-2011, 04:12 PM
So your contention that ss is in trouble because people are living longer isn't valid.

Steve

LWW
06-09-2011, 04:26 PM
SS is in trouble because it's been a Ponzi scheme from the very start.

Soflasnapper
06-09-2011, 05:08 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pooltchr</div><div class="ubbcode-body">So your contention that ss is in trouble because people are living longer isn't valid.

Steve </div></div>

Where do you get this stuff? Where did I ever say that?

If this is a comedy routine, please update your material to be funnier! Thank you.

LWW
06-10-2011, 06:54 AM
So where is the money in the "SS TRUST FUND" ... I'd like to see it.

It's unlike money deposited in the bank. If I demand to see my money in the bank, even though it's physically not there ... I can be shown where it was used for the building of homes, factories, cars, and other hard assets and loaned to people with good credit and assets.

That differs dramatically from having my money invested in a bank which says "let me go in the back and print some cash off for you" when I want to make a withdrawal.

Your stunning level of blind faith in a bankrupt system is what the state relies upon to continue.