Saturday, October 13, 2007

Crusty Jack Does What WSJ Won't

While a world reknowned business journal lobbed softballs at President Bush, George struck out. He couldn't bring the bat around on backdated stock options, resulting in a third strike. I wondered why he gave such a sorry answer, then I remembered his Uncle Bucky benefited from executives in ESSI carrying out the cheating scheme.

Not all reporters cower in front of the President and not all truthseekers work for Rupert Murdoch. It was refreshing to read this segment last night, although I wonder why this is buried in transcript and not a full feature piece on the CNN homepage?

JACK CAFFERTY, CNN ANCHOR: Wolf, the Bush administration is in danger of breaking its arm from patting itself on the back. They announced that the federal budge deficit declined for a third straight year to $163 billion. They also said the number came in under an earlier estimate of $205 billion.

Well, don't get too excited, because they're lying. "Fortune" magazine's Allan Sloan warned us about this very thing in a great piece entitled "Fuzzy Bush Math". It came out a month ago. In the piece, he said Washington would report another decline in the deficit. They did. He pegged the number at $158 billion, which is pretty close for an article that came out a month ago. He only miss it $5 billion.

Sloan explains the federal government operates under its own unique budget accounting system, regardless of which party is in power. Here's how it works. Social Security, for example, will take in $78 billion more in payroll and income taxes than it shells out this year. That's a surplus. But the government takes that money and spends it, and gives the Social Security trust fund an IOU. There is no money in the Social Security trust fund, only government IOUs.

The Treasury will pay $108 billion of interest on the trust fund's $2.2 trillion of treasuries, but that, too, will be paid with IOUs. The money will be spent.Right there, add those two together, $186 billion, which would more than double the stated budget deficit. And there are other financial shenanigans that go on that make the number even higher. We don't have time to go into them all.

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