Fiscal specialist unravels illusions of federal accounting with WGSO’s Jeff Crouere

NEW ORLEANS, La. – The federal government reported surpluses in the 1990s, yet its debt still rose. Louisiana has a balanced budget amendment, yet it too has continued to accumulate debt. How can this be?

This morning, Jeff Croure of WGSO 990 interviewed Sheila Weinberg, founder and chief executive of the Institute for Truth in Accounting, to find out why. Click below to hear the interview – 16 minutes.
[audio:http://bit.ly/g0XdBd]

Weinberg explained that cash-basis accounting, rather than normal accrual calculations and techniques, is at the root of the problem.

“They just play all these accounting games that allow them to pretend their budget is balanced – when it’s not… The IRS doesn’t allow a corporation that makes over $10 million to do their books on that basis, because it’s so unreliable, but that’s how the state and federal governments are doing their budgets.”

Crouere questioned then the value of a balanced budget amendment and retention of the debt ceiling. Weinberg joked, “Do you have authority to increase your credit limit. Wouldn’t that be nice.” And she noted that even with “fact-based budgeting” and adherence to a balanced budget amendment, that would only stop the federal government from digging deeper.

“You wouldn’t get further in the hole, but it would not take away the $76 trillion that is already accumulated. You would have to start running true surpluses in order to make that happen.”

Despite 44 cents of new debt for every dollar of next year’s proposed budget, Weinberg does see limited promise.

“The word ‘cut’ is coming out of their mouths, on both sides… They are at least offering it.”

IFTA is a Chicago-based, non-partisan and non-profit organization whose members seek to promote “honest, accurate, and transparent accounting at all levels of government.” They released a Financial State of the State for Louisiana in January this year (which The Pelican Post reported on here).

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy and editor of The Pelican Post. He can be contacted at fhodgson@pelicanpolicy.org, and one can follow him on twitter.

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