USA Today: Real Deficit is $5 Trillion

A USA TODAY study finds that the typical American household would have had to have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit.

Under those accounting practices, the government ran up debt equal to $42,054 per household last year, which is almost four times the official number reported.

A U.S. household’s median income is $49,445.

Unlike standard accounting, Congress exempts itself from including the cost of promised retirement benefits when figuring out the budget. Companies, state and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.

The deficit was $5 trillion last year under those rules instead of the official number of $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was left off of the government’s books.

According to USA TODAY’s calculation federal finances under these accounting rules since 2004 found no correlation between fluctuations in the deficit and which party ran Congress or the White House.

Key findings:

•Social Security had the biggest financial slide. The federal government would need $22.2 trillion, set aside and earning interest, to cover benefits promised to current workers and retirees beyond what taxes will cover. That’s $9.5 trillion more than was needed in 2004.

•Deficits from 2004 to 2011 would be six times the official total of $5.6 trillion reported.

•Federal debt and retiree commitments equal $561,254 per household. By contrast, an average household owes a combined $116,057 for mortgages, car loans and other debts.

“By law, the federal government can’t tell the truth,” says accountant Sheila Weinberg of the Chicago-based Institute for Truth in Accounting.

Jim Horney, a former Senate budget staff expert now at the liberal Center on Budget and Policy Priorities, says retirement programs should not count as part of the deficit because, unlike a business, Congress can change what it owes by cutting benefits or lifting taxes.

Lawmakers Pitch Cuts, Reforms to Congressional Pensions

Six House members testifying before the Oversight and Government Reform subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy advocated new ways to cut retirement benefits for themselves and the rest of Congress.

“Our national debt has topped $15 trillion, and the federal government borrows 42 cents for every dollar it spends,” said Rep. Tim Griffin (R-Ark.). “The American taxpayer can no longer afford to pay for the retirement benefits of members of Congress.”

Griffin is pushing for legislation that would eliminate congressional pensions for future members and have them rely solely on the Thrift Savings Plan, Congresses version of a 401(k) plan.

Rep. Mike Coffman (R-Colo.) one ups Griffin, advocating the elimination of pensions for current members as well. His office says that move could save more than $13 million per year for the current Congress alone.

Other lawmakers have come forward with alternatives to the slash-and-burn proposals of Coffman and Griffin.

Rep. Howard Coble (R-N.C.) wants to lengthen the time of service required for a member to be eligible for a pension.

“It extends the time required from five years to 12 years before a member is vested in an annuity under the Federal Employee Retirement System,” he testified. “It is the equivalent of two terms in the Senate or six terms in the House or any combination of the two.”

Coble’s proposal would only apply to future members, not those who have already been elected.

Rep. Bobby Schilling (R-Ill.) Congressional Retirement Age Act would tie lawmakers’ pension eligibility to the Social Security retirement age of 65. Members are currently eligible to receive pension benefits at age 62 after five years of service, or as early as age 50 after 25 years of service.

Schilling estimates a savings of up to $15 million over 10 years. The proposal has received bipartisan support, with 26 co-sponsors in the House, including subcommittee members Reps. Dennis Ross (R-Fla.) and Jason Chaffetz (R-Utah).

Instead of making definitive changes to the pension system, Rep. Rich Nugent (R-Fla.) wants to give members a choice.

His Congress is Not a Career Act would allow members of the House elected after September 2003 to opt out of receiving pension benefits.

“I was shocked when the [congressional] benefits representative told me that I was legally required to accept a congressional pension, as long as I was here for at least five years,” he testified. “Similarly, I couldn’t contribute to a [Thrift Savings Plan] without a federal match. Even more, if I didn’t put a single penny into the TSP, the government would still contribute a match of one percent of my salary, without any cost to me.”

The legislation from the former Hernando County sheriff is “about allowing those of us who don’t view this institution as a career, who don’t think that we should get a pension for serving our country, who don’t think we should be enriching ourselves while sitting in the peoples’ House, the ability to opt out,” he added.

Rep. Robert Dold (R-Ill.) cited a recent National Taxpayers Union study that estimated “federal lawmakers convicted of various crimes are currently drawing a combined pension benefit of more than $800,000 per year.”

According to Dold, that does not include convicted lawmakers who are so far ineligible for receiving their pension, or whose public corruption cases are still pending in the courts. The Honest Leadership and Open Government Act, signed into law by former President George W. Bush in 2007, also only holds that members forfeit their pension if the crimes for which they were convicted occurred while they served in Congress.

Last June, Dold and Rep. Mike Quigley (D-Ill.) introduced the Congressional Integrity and Pension Forfeiture Act, prohibiting a former member of Congress from receiving a congressional pension if they are convicted of an offense that occurred while subsequently serving in any publicly elected office.

The bill also adds 20 additional covered public corruption crimes for which, if convicted, a member would forfeit his pension benefits. Though cost savings would not be as significant as other bills proposed before the subcommittee, Dold said public trust is at stake.

“This legislation will help in our ongoing efforts to restore public trust in this institution and those who serve in it,” he testified.

As Congress faces its lowest approval ratings in memory, and the few Americans who still receive pension benefits have seen them plummet during the economic downturn, it’s left to members to reconcile their benefits against their own constituents’.

“I just think this is a sore spot with a lot of Americans, that members of Congress have a benefit that’s not available to most,” Coffman said in November.

Governor Rick Perry’s campaign gets off to rocky start…

Texas Governor Rick Perry ran into some opposition as he campaigned in Iowa recently. Protesters surrounded the presidential hopeful with signs and expressed their concerns over Perry’s view that social security is unconstitutional. Someone should tell Perry to consult with the supreme court next time he has a question about what’s constitutional and what’s not.
Check out the video below via Thinkprogress.org

Sen. Joe Lieberman says U.S. should cut Social Security to fund war on terror…

Via ThinkProgress.org:

 

Screw old people we got brown people to kill.

Mr. Krugman tells liberals what Obama wants…

Noted economist Paul Krugman’s OP-ED piece entitled “What Obama wants” regarding the debt deal negotiations with republicans is a must read for any Obama supporter.

Check it out here.