The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the "2008 Financial Report of the United States Government" as released by the U.S. Department of Treasury.I believe I correctly backed into that $5.1 Trillion number below (drop me a comment if anyone interpreted this differently).
The difference between the $455 billion "official" budget deficit numbers and the $5.1 trillion budget deficit cited by "2008 Financial Report of the United States Government" is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.
Click for larger chart
More frightening, the article details the growing federal obligations as calculated by John Williams at Shadowstats:
Calculations from the "2008 Financial Report of the United States Government" also show that the GAAP negative net worth of the federal government has increased to $59.3 trillion while the total federal obligations under GAAP accounting now total $65.5 trillion.
How large a figure is this? More than the size of the global economy, estimated at $54 Trillion for 2007.
Source: ShadowStats / Department of Treasury
Yes, that is large. Quite large. Like 5-6X US GDP???
ReplyDeleteThis is why SS and Medicare (at least at current age ranges) for baby boomers is a myth.
ReplyDeleteIs this accurate? I don't really trust Worldnetdaily, tbh.
ReplyDeleteAny accountants care to comment? I don't have the patience to wade into the 206 page Treasury document.
Irrational Doomsday: I updated the post with how I believe they are calculating the $5.1 Trillion. Let me know what you think.
ReplyDelete-Jake
That table looks correct to me.
ReplyDeleteHere's the thing that I would consider how they got the figure so alarmingly high though-
It appears to me the Treasury is doing a net present value of all projected inflows and outflows assuming nothing changes.
In a recession/deflation where tax receipts are plummeting, but I'm sure they're forecasting health care and CPI to keep growing at the present rate, I'd expect the numbers to be alarmingly divergent from breakeven (especially since this is the whole country and their numbers are forecasting what everyone will cost under the current entitlements into the future).
It seems to me that IOUSA used similar accounting to predict out of control situations within decades.
I'd say the figures are useful to demonstrate that the current track is clearly unsustainable in the long term- and that entitlement reform or contribution levels need to be changed.
But it also seems like it was set up to maximize shock value. If you're comparing apples to apples, it seems to me you would not compare the number to an annual GDP, but to a forecast net present value GDP over the same timeframe. Does that sound correct?
i get what you are saying (and i am sure they are using "shock values"), but i'm not sure present value of GDP is a fair comparison either.
ReplyDeletecomparing the obligations against current GDP is like comparing the amount of debt an individual has vs. their current income.
so... if the average person is making $50k per year, the equal level of obligations for this person (if they WERE the U.S.) would be $200k or about 4x current income levels, which seems high, especially if this person is in the process of "bailing out their family", will likely be getting a pay cut, and will have trouble refinancing their debt in the coming years (gotta compare to the U.S.).
my question: would it be easy to compare the $200k of debt that person has vs. the present value of their future income? probably not because:
A) future income is difficult to predict
B) income does not equate to amount available to close the funding gap... net income (i.e. future surpluses is what matters), but we both know future expenses (i.e. stimulus) are rising over the short-term, not falling.
to summarize.. i don't know how to best compare these figures, but maybe its not important. the takeaway is exactly what you said; these levels are unsustainable.
I concur with you on that jake....
ReplyDeleteThese are the liabilities What are Federal assets worth?
ReplyDelete