The Feds Cook the Books Once Again
Every year, an oddball reads the General Accounting Office’s audit of the financial statements of the U.S. government and writes about the alarming findings, although no one else seems to care about the issue, especially the two guilty parties, the Democrat Party and the Republican Party.
Because both parties are guilty of cooking the nation’s books, the partisan left-wing media and the partisan right-wing media are silent about the issue, just as they are about other issues where both parties are to blame.
But widespread disinterest won’t stop this oddball from continuing his annual tradition of writing about it. After all, my favorite pastime is spitting in the wind.
The most recent audit says that “control deficiencies in the Department of the Treasury’s (Treasury) and the Office of Management and Budget (OMB) processes” make the government unable to “adequately account for intra-governmental activity and balances between federal entities.”
Nor can the government assure that its consolidated financial statements are in accord with “generally accepted accounting principles.”
In other words, the government is violating the accounting standards that it imposes on businesses—and has sent business executives to prison for violating, as was the case with executives at Enron and WorldCom.
Yet no treasury secretary of either party has gone to prison for cooking the books, including Timothy Geithner, who even forgot to file his tax return one year. No doubt, current Treasury Secretary Janet Yellen will continue the tradition of cooking the books and going scot-free.
The books for Medicare and for the Defense Department are particularly cooked, which is very troubling given the size of their budgets.
The GAO uses bureaucratese to describe the deficiencies in Medicare accounting, so I’ll translate it to layman’s language: The projections of future costs and cost savings for the huge program are malarky.
The GAO’s assessment of the Department of Defense’s accounting doesn’t need a translation. It says that there are “serious financial management problems at the Department of Defense.”
Later in its report, the GAO writes that such problems “hinder the federal government from having reliable, useful, and timely financial information to operate effectively and efficiently.”
The audit agency is confused. It thinks that the apparatchiks who dominate the top of the government agencies, and the lawyers who dominate Congress, care about effectiveness and efficiency and would know how to achieve it if they did care.
I’ll leave it to economists and political scientists to debate whether effectiveness and efficiency can be attained in the absence of a profit motive and the fear of going out of business and being unemployed.
Speaking of going out of business, the GAO says the following near the end of its report: “The federal government continues to face an unsustainable long-term fiscal path in which debt is projected to grow faster than gross domestic product.”
Are you still with me? Did you fall asleep, or are you following the Kardashians on Twitter?
