Honest Abe Analysis

I much appreciate when ANYONE in the media points out the insane federal deficits and debt, most dishonest, borrowing "under the table" from SS without counting it as part of the deficit.

All the BS about "reforming SS" is complete nonsense compared to the theft of this "trust fund". Of course SS is NOT a trust fund, but the money collected for it WILL be repaid with interest someday and the FUTURE taxes needed to repay this will be MUCH LARGER than the projected shortfalls in actual payments of SS benefits due to insufficient collection.

Anyone expecting SS payments in 20 year or longer away can have their delusions properly grounded now - there's NO MONEY to pay it, and whatever sort of budget that exists then, you can be SURE that it will NOT be raised sufficiently to repay SS borrowing from the present. Heck, who even knows if we'll be paying back EXTERNAL debt, like that China is lending us now to prop up our sorry debt economy.

Anyway, I can be calm now since I know the truth. Elected reprepresentatives DON'T CARE about anything more than 4-8 years ahead, so it's not their problem. And those that DO CARE are doing the BEST they can to STEAL as much for their interests NOW while the GETTING IS GOOD.

Any elected official whom calls for fiscal constraint is talking from the side of his mouth - talking about OTHERS spending, not the spending that benefits his interests. Only a sucker turns down free money, and the pork is THICK and JUICEY as long as we keep our eyes blissfully closed to the future.

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http://www.startribune.com/484/story/709187.html
U.S. deficit's funny math
Kevin G. Hall, McClatchy News Service

WASHINGTON
The U.S. government will close the books on fiscal 2006 Saturday, and politicians are likely to trumpet that the federal deficit came in almost $60 billion below projections. Problem is, they won't be using the same math that you use.

The nonpartisan Congressional Budget Office has projected that the federal deficit for the fiscal year ending Sept. 30 will total around $260 billion, aided by a surge in revenues. That's $58 billion lower than last year's deficit and about $77 billion lower than projections at the beginning of the fiscal year.

Great news? Budget experts in Washington and on Wall Street say it's a welcome development, but misleading. Washington's funny math excludes the Social Security trust fund, which is running a $177 billion surplus this year. Washington spends it, but doesn't count it as spending. It's officially listed as "off-budget" borrowing.

"In practice, all the money Washington collects goes into the same pot and gets spent the same. On paper, we say we'll pay Social Security back later," said Brian Riedl, chief budget analyst for the Heritage Foundation, a conservative research center.

So the deficit is actually about $437 billion, the CBO calculates -- the $260 billion official deficit plus the $177 billion borrowed from the trust fund. Since the money is "borrowed," it adds to the gross federal debt, which is expected to reach about $8.5 trillion by Jan. 1.

This is why New York investment bank Goldman Sachs & Co. issued a dour report Sept. 22 titled, "The U.S. Budget Outlook: No Lasting Improvement."

A longtime gimmick

Spending trust-fund money to mask the true size of the federal deficit is a longtime Washington gimmick, but even so, Heritage calculates that the Bush administration and the Republican-led Congress have increased government spending by 45 percent since 2001. Heritage uses spending numbers from the White House Office of Management and Budget.

Federal spending increased 9 percent in fiscal 2006, the biggest jump since 1990. It's risen sharply for education, agriculture and several nondefense programs as well as for the war on terrorism and homeland security.

"It's really been a guns-and-butter spending spree," Riedl said. "Of all the federal spending increases since 2001, defense and homeland security combined are responsible for less than a third."

Heritage calculates that discretionary spending, excluding defense and homeland security, has increased by 7 percent annually during the Bush presidency. That nearly doubles the 4.2 percent annual growth under former President Bill Clinton.

The current spending increases appear less dramatic, however, when they're viewed as a percentage of gross domestic product (GDP), the total value of U.S. goods and services produced in a year. In its midyear review, the White House projected fiscal 2006 spending in the ballpark of 20 percent of the GDP. That's about the same as it was for most of the 1990s, although up sharply from 18.4 percent in 2000.

"We're in a situation where the immediate cash budget isn't the issue. People shouldn't focus too much on that," said Robert Bixby, executive director of the Concord Coalition, a bipartisan grass-roots organization that advocates balanced federal budgets. "The real issue we need to start paying more attention to is what sort of enormous balloon payment are we setting ourselves up for in the future."

Looming just over the horizon is a huge demographic shift that will strain the federal budget enormously. On Jan. 1, 2008, the first baby boomers -- 76 million Americans born from 1946 to 1964 -- become eligible for Social Security benefits. From that point on, a two-decade assault on federal finances begins. The federal government will turn to an ever-declining number of active workers to pay for the health and retirement benefits it has promised to baby boomers.

"For people who think that's a long ways off, the first baby boomer collects their first Social Security check in 14 months," Riedl said. "No economic boom can make up for Medicare rising 9 percent, Medicaid rising 8 percent and Social Security rising 6 percent."