Do you ever wonder what the federal budget would look like if the federal government used accounting methods the law requires of corporations? The current deficit would be a heck of a lot higher than a trillion dollars, that’s for sure. USA Today crunched the numbers and it’s alarming.
The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, a USA TODAY analysis finds.
Under those accounting practices, the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported under unique rules set by Congress.
A U.S. household’s median income is $49,445, the Census reports.
The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.
The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government’s books.
The worst part about this is that so many Americans no longer pay federal income taxes, so what do they care? But they should, because eventually the well’s going to run dry.