The 54 Trillion Budget Bomb

The annual budget (prepared by the executive branch through the Office of Management and Budget and also calculated by Congress through the Congressional Budget Office) focuses on cash flow, i.e., whether the government ran a surplus or a deficit. While it's useful, because the report is prepared on a cash basis, it does not tell the full story, since billions of dollars are accrued each year for liabilities not yet due but certainly coming due. The real accrual number, a figure that is almost never reported, can be determined only by analyzing yet another document, one put out by the U.S. Treasury Department. That analysis reveals a startling truth: Not only is the real federal deficit consistently under-reported, it is uncomfortably high, even with the ballooning revenues and improved cash flows in recent years. Consider the past four years. The federal budget deficits on a cash basis for 2004, 2005, 2006 and 2007 were reported as $412 billion, $319 billion, $248 billion and $163 billion, respectively. Prepared on an accrual basis, however, which is the way all U.S. public companies report, the deficits for these same years were $616 billion, $760 billion, $450 billion and $276 billion. More worrisome, while the trend is quite good, the deficits would have been substantially greater if revenue from taxes had not increased more than 46% from $1.8 trillion in 2003 to $2.63 trillion in 2007, more than an average of $200 billion per year. . . . http://www.forbes.com/2008/02/08/budget-deficit-taxes-ii-in_aq_0208soapbox_inl.html

Note: http://www.forbes.com/2...