Thursday, November 5, 2015

Accountants are such a pain in the ass

Here is page 51 of the US Treasury annual statement for 2014.  It is the summary of footnote 24.  It is ONLY for social security, medicare, and the small amounts for railroad retirement and black lung disease.

{click to enlarge}

Take 2014's liability of 41.9 trillion dollars and subtract 2013's liability level of 39.7 trillion dollars and that gets an increase in liabilities of 2.2 trillion dollars in 2014..  This doesn't show up on the income statement as it is a cash basis statement.  So this is the footnote disclosing it.  This allows politicians to fool the schmucks. They should add this 2.2 trillion dollars to the deficit of $483 billion (though it actually is $618 billion) to get a 2014 federal deficit of 2.68 trillion dollars.

If you include the budget function (budget functions are groups of expenditures) of income security along with the budget function of social insurance above, the Federal Government incurred 5 trillion dollars that isn't shown on the actual income statement.

What the net present value of $41.9 trillion dollars means:  It is the amount that the US should have in the bank as cash, along with compound interest, in order to be able to fund social security and medicare for the next 75 years.  This estimate of $41.9 trillion includes revenue and expenditures for everyone alive and to be born who become eligible for the benefits over the next 75 years.

When you include income security, the amount that should be in the bank today is 87 trillion dollars.

Ah.  Who wants to hear that the actual budget deficit was $5.4 trillion last year.  They are just a bunch of dumb accountants.  We can reduce income security someday and borrow the rest.  As the world's reserve currency we can borrow as much as we need and keep interest rates low.  Right?

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