The real deficit

Uncle Sam keeps two sets of books — the one the president and the media like to tout, and the one that tells the truth.

And in the Treasury Department's latest "Financial Report of the United States Government," both sets of books are laid bare:

The federal deficit for 2007 would have been 69.2% higher than the $162.8 bln reported at the end of the fiscal year on Sept 30 if the government had to use the same accounting methods as private companies…

The report, released by the Treasury Department and the president's Office of Management and Budget, found that, under the accrual method of accounting, the deficit for 2007 would have totaled $275.5 bln, not the widely reported $162.8 bln incurred under the cash system of accounting.

Private companies would face the fate of Enron if they used the cash system of accounting.  But the gummint can play by different rules.  One of the few good things to come out of the Republican Congress and the Clinton White House was the annual issuance of the accrual figures:

Ten years ago, Congress ordered the government to start issuing annual reports using the accrual method of accounting in an effort to show the finances in a way that was comparable with the private sector.

The report found nearly the entire difference between the two deficit calculations is $90.1 bln in retirement benefits earned by, but not yet paid to government officials and the military in fiscal year 2007.

These benefits are contractually earned the way that private pensions are. That is different from the underfunding of social security, which is not included in this report but is expected to come up $45 trln short in the next 75 years.

I'm sure the fearless John Williams is poring over this report and crunching the exact figure that does include Social Security — a figure that would hew to generally accepted accounting principles (GAAP).  The total he came up with a year ago was — and mind you, this is the annual deficit, not the national debt — of $4.6 trillion.  I'm watching out for his updated numbers.