This nation's path to fiscal ruin
David S. Broder
April 13, 2006
WASHINGTON — The interview with Rep. Jim Cooper of Tennessee was
scheduled for April 7, the final day that Congress would be in session
before taking another vacation, this one a two-week break. It was
expected to be a busy day in the House, with final floor debate on the
budget resolution that would set the nation's fiscal policy for the
But the House Republican leaders pulled the bill, having failed
to negotiate agreement on their side of the aisle between conservatives
pressing for spending cuts and moderates trying to protect health and
So Cooper, a conservative Democrat, had
plenty of time to talk about one of the most secretive documents in
Washington — the official Financial Report of the United States
Cooper, a member of the Budget Committee, had referred to the
document several times during that panel's truncated debate on the
budget resolution. Like many of the others in the room —
including the legislators — I had no idea what he was talking
about. So I went to inquire.
Turns out, there was an excuse for the widespread ignorance. The
report had been completed early last December but was issued on Dec.
15. The Treasury Department, which compiled it, did not even put out a
press release announcing its existence. Cooper said the total press run
was 1,000 copies, and they have now become such rarities that he
suggested I could probably take the one he procured for me and put it
up for auction on eBay.
You might think that the subject matter is as sensitive as the
National Intelligence Estimate that President Bush declassified in
order to discredit Joe Wilson.
And it is. The cover letter in the report from Treasury Secretary John Snow contains the bad news. Whereas
the budget deficit for fiscal 2005 was officially given as $319
billion, "the government's accrual-based net operating cost ... was
$760 billion in 2005."
That $760 billion is the real difference between the money the
government received and the obligations it added in the last year
— in other words, the unfunded costs being passed on to our
children and grandchildren.
For years, the federal budget has been stated in cash terms, not
the accrual accounting method that Cooper said has been in use for five
centuries and now mandated for all private corporations. The
difference, as he explained it, is this:
If you go to
Target and buy an item for cash, it's felt in your wallet immediately.
If you buy the same item on a credit card, unless you are using accrual
accounting, it is disguised until the bill arrives.
government has been running up bills — notably the promises of
pensions and health care benefits for military veterans and millions of
other retirees — without putting the obligations on the books.
That is what is really scary about the Financial Report. It
contains page after page of graphs showing the probable future course
of income and expenditures for Social Security and Medicare. In each
chart, the dotted line for spending climbs far faster than the solid
line for revenues. Beginning a decade from now, the shortfalls explode
in what Cooper calls "a perfect storm" of fiscal ruin.
Cooper is not alone in this worry. David
Walker, the head of the Government Accountability Office, the official
bookkeeper for Congress, said at a briefing last week that the $760
billion accrual deficit "amounts to $156,000 of debt for every man,
woman and child in America. For a family, it's like having a $750,000
mortgage — and no house."
Walker, who has been traveling the country trying to spread the
alarm, said flatly that if the tax cuts now in effect are made
permanent, as President Bush is requesting, and spending continues to
rise at the current rate, "the system blows up. More than half our debt
is now financed by foreign countries, and they will exact a price."
Digging out of this mess "will take 20 years," Walker said, but
the first step is simply to reassert the budget controls —
spending caps and a "pay-go" rule that requires offsets for any new tax
cuts or spending increases.
The Republicans who let those lapse in 2002 refused once again this year to put them back in the budget resolution.
The message is clear: Congress today is balking at even minimal
actions needed to get a grip on the budget. The long-term problem is
far tougher, and will require more leadership and courage than can be
David S. Broder's column appears regularly on editorial pages of The Times. His e-mail address is email@example.com