You may remember Congressman Jim Cooper’s 2006 publication of the Financial Report of the United States: The Official Annual White House Report, which presented a true picture of the U.S. deficit. In the book’s foreward, Cooper wrote that the Bush administration uses faulty accounting methods to calculate the country’s debt and that it’s actually more than twice the official stated amount.
According to Cooper, the President’s budget issued by the Office of Management and Budget and used by Congress to develop the annual budget, is based on cash-accounting. The “Financial Report of the United States,” issued by the Department of the Treasury, uses accrual-basis accounting. Federal law requires all businesses with revenues of $5 million or more to use accrual accounting. The Financial Report and accrual accounting, Cooper says, remembers the most vulnerable people in our society and the “commitments we’ve made to them,” takes into account “future obligations of the federal government,” and presents “a clearer, more understandable picture of federal finances.”
Today, Congressman “Coop” Cooper, (He lets us call him “Coop.” OK, no he doesn’t.) of Tennessee’s Fightin’ 5th, continues his assault on the administration’s machinations with an opinion piece in the Wall Street Journal. But this time he calls out congress, or as he nicknames them, the “Incumbent Party,” for perpetuating the administration’s deceit by “preventing any bad news from reaching voters.”
And just what is the economic platform of this “535-strong political caucus?” What “fundamental principles” do they adhere to? According to Cooper:
• Pretend to budget for the next five years while offering instead a one-year political fix. Whether the issue is funding the war on terrorism, or preventing the Alternative Minimum Tax from punishing the middle class, neither wing of the Incumbent Party offers any lasting solutions, only budgetary gimmicks.
• Nod gravely when America’s long-term fiscal problems are mentioned, but argue that today’s budgets have almost nothing to do with the unsustainability of Medicare, Medicaid and Social Security. After all, most of today’s elected officials will be safely retired — and some buried — before these entitlement programs collapse.
• When pressed, bemoan the fact that every American’s share of the national debt is $29,000 and growing. Forget that a more accurate, audited figure is $170,000 each, or $440,000 per household. People don’t owe Uncle Sam the equivalent of a car loan; they owe a home mortgage, and that’s on top of their current taxes.
• Pledge to protect Social Security and Medicare “trust funds” without hinting that those trust funds do not exist. Today’s Social Security surpluses are invested in U.S. Treasury bonds, which enable government spending on everything except future Social Security benefits. Future beneficiaries have no real security other than the hope that future workers will pay more payroll taxes.
• Promise Social Security and Medicare benefits that the Social Security actuary says are not even promises, much less vested benefits. They are only “scheduled benefits,” which can be rescheduled, or eliminated, at any time by any Congress. Rescheduling is even easier to do when Congress refuses to record today’s benefit levels on any federal balance sheet.
• Ignore the fact that the federal budget deficit would be at least twice as large if you were not using the Social Security “surplus” to hide its true size. The use of this fig leaf is particularly ironic when, if Social Security and Medicare were properly accounted for, the annual federal fiscal gap would be roughly $4 trillion, or 10 times larger than any politician will admit. This annual gap is larger than the entire federal budget of $2.9 trillion.
• Shamelessly exempt the federal government from normal Generally Accepted Accounting Principles (GAAP), making it the only large entity in America — private or public — able to flout the rules. Although the Republicans’ Contract with America in 1994 pledged that Congress should abide by the laws it passes, federal accounting hypocrisy is stronger than ever. Even state and local governments now have to properly report their retirement and health liabilities.
• Subsidize employer-sponsored health insurance by offering the biggest federal income tax breaks to the people who need it least: high-wage employees of large companies. Oppose any redistribution of those tax breaks, even when President Bush called for such reforms in his 2007 State of the Union Address.
• Keep median cash incomes stagnant for decades while fringe benefits, particularly for health insurance, consume most employee productivity and profitability increases. Deny that any tax vacuum exists that sucks up every worker’s pay raise and transfers it to the health sector of the economy.
• Never even whisper that Standard & Poor’s has projected that by 2012, when the budgets of both wings of the Incumbent Party claim to be producing surpluses, the U.S. Treasury bond will lose its AAA rating. Even worse, S&P is also projecting that Treasuries will become junk debt by 2025.
Is America living up to its potential, or falling below investment grade? Democrats have a rare opportunity to buck the bad habits of incumbency with our new majorities in Congress. If we choose to enact the stale economic platform of our predecessors, we do so at our own peril, and our children’s. If, on the other hand, we begin to speak honestly about the large problems facing the U.S. economy, perhaps voters will keep us around long enough to fix them.
This topic isn’t as sexy as lying attorney generals but it’s more important. Here’s hoping Coop, I mean, Congressman Cooper, is finally heard.
Actually, we need to review the transcript from his interview last week. It’s possible that he does, in fact, now let us call him “Coop”. Too bad we lost the audio!