Screw Job #3

This blog entry started out as a recognition of another screw job on the American public as a result of the $43 billion spending sequestration that took effect on March 1^st.  Homeland Security chief, Janet Napolitano seems to be in the vanguard of sticking it to the U.S. public … first by releasing thousands of illegal immigrant criminals (see: Screw Job #1) and now by cutting back on TSA agents at key airports (see: Nattering Napolitano).  As I read this article, I thought to myself, “Wait a minute, furloughing TSA agents won’t do anything to save money.  Furloughed workers will still be paid their lost salaries when they return to work.”  In other words, accrued expenses should still be counted against what the government spends … no?

This led me to the bigger question … and the much, much bigger screw job when I researched the subject of whether our government accounting is run on an accrual or cash basis.  As it turns out, like many other things in our dysfunctional Washington, it depends … see the following reference on this subject: Accounting Smart Pros.  When asked this question our ever-alert government bureaucrat responded,

"I don't think there's a way to answer that question in such a broad sense of the term," she said. "For any given report, it depends. There are reports that refer to obligations made or funds that have actually been paid out. The question depends on which line (of the budget) you're referring to, basically."

What?  Are we nuts?  If any company or individual mixed accounting methods, the IRS would put them on the CPA rack and then send them to Leavenworth for the rest of their natural lives.  See this comment from the previous reference:

It's the kind of answer that seems to upset many economists and politicians. Just last March, Rep. Todd Platts, R-Pa., and chairman of the House's Government Organization Subcommittee, held hearings to see why the real 2010 federal deficit was possibly $800 billion more than the $1.3 trillion reported. One reason they investigated: The government still mixes the two accounting methods, which may produce a rosier bottom line.

So, now we see that even the officially published numbers for the deficits we have been running up are suspect.  Depending on the trustworthiness of our various government agencies, we may be much further under financial water than we have been led to believe.  So now I ask the $64 trillion question … do we trust our government agencies not to cook the books?  I think I smell some acrid smoke and hear the alarm bells going off ...