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Bottomfeeder

.50 SS check

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The way things are going with the Federal Budget and wild spending, this scenario could happen. It's that kind of mindset that overwhelms me when I read the GAO reports.

Here is an little bit from a the December 20, 2007 report, page 15.

We have previously noted that while both cash and accrual measures of the government’s overall finances are informative, neither measure alone provides a full picture.15 For example, the unified budget deficit provides information on borrowing needs and current cash flow, but does not measure the amount of resources used to provide goods or services in the current year. While the accrual deficit provides information on resources used in the current year, it does not provide information on how much the government has to borrow in the current year to finance government activities. Nor does it provide information about the timing of payments and receipts, which can be very important. Therefore, just as investors need income statements, statements of cash flow, and balance sheets to understand a business’s financial condition, both cash and accrual measures are important for understanding the government’s financial condition.

Although a more complete picture of the government’s fiscal stance today and over time comes from looking at both the cash and accrual measures than from looking at either alone, even the two together do not provide sufficient information on our future fiscal challenges. In addition to considering the federal government’s current financial condition, it is critical to look at other measures of the long-term fiscal outlook of the federal government. While there are various ways to consider and assess the long-term fiscal outlook, any analysis should include more than just the obligations and costs recognized in the budget and financial statements. It should take account of the implicit promises embedded in current policy and the timing of these longer-term obligations and commitments in relation to the resources available under various assumptions. For example, while the cash and accrual measures showed improvement between fiscal year 2005 and fiscal year 2007, our long-term fiscal outlook did not change. In fact, the U.S. government’s total reported liabilities, net social insurance commitments, and other fiscal exposures continue to grow and total more than $52 trillion, representing approximately four times the nation’s total output, or gross domestic product (GDP), in fiscal year 2007, up from about $20 trillion, or two times GDP in fiscal year 2000 (see table 1).

Page 17:

One summary measure of the long-term fiscal challenge is called “the fiscal gap.” The fiscal gap is the amount of spending reduction or tax increases that would be needed today to meet some future debt target. To keep debt as a share of GDP at or below today’s ratio under our Alternative simulation would require spending cuts or tax increases equal to 7.5 percent of the entire economy each year over the next 75 years, or a total of about $54 trillion in present value terms. To put this in perspective, closing the gap would require an immediate and permanent increase in federal tax revenues of more than 40 percent or an equivalent reduction in federal program spending (i.e., in all spending except for interest on the debt held by the public, which cannot be directly controlled).

As demonstrated by these various measures, our nation is on an unsustainable fiscal path. This path increasingly will constrain our ability to address emerging and unexpected budgetary needs and will increase the burdens that will be faced by future generations. Since at its heart the budget debate is about the allocation of limited resources, the budget process can and should play a key role in helping to address our long-term fiscal challenge.

http://www.gao.gov/new.items/d08206.pdf

Edited by Bottomfeeder

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