Building a political movement around the details of federal accounting standards reform has the potential to leave the most passionate accountants glassy-eyed.
But Sheila Weinberg thinks her core message is simple enough: the federal government is keeping its books much like Enron did, and all of us will end up paying for it.
Weinberg says the government is vastly overstating how much money it has, ignoring massive obligations to future senior citizens and engineering a financial train wreck that will hit taxpayers in 15 years. Through a group she founded in 2002, the Institute for Truth in Accounting, she hopes to recruit enough lawmakers and voters to head off the problem.
“The institute was founded due to my belief that the public and our elected officials need a more complete picture of our government’s finances,” Weinberg said. “The American people need accurate accounting information.
“They are making huge decisions based on inaccurate information.”
Weinberg said the crux of the problem is that all of the budget surpluses reported and haggled over in recent years don’t really exist. The largest piece of the problem lies with Social Security. Money paid into the system should be set aside each year to cover costs of future retirements, she said, but instead is used to pay out current benefits. Leftover money from year to year is treated like income, which falsely pumps up budget figures and surpluses, she contends.
Weinberg said the Congressional Budget Office projects surpluses of more than $1 trillion from 2003-12, but that is based on money which is basically borrowed from the future. The real number, she said, would be a $2.4 trillion deficit.
“There was never a point in time we had an actual surplus,” Weinberg said. “They do what Enron did.
“They take the money they’re borrowing from the pension plans and record that as income,” Weinberg said.
Unlike Enron, the federal government can get away with the ruse for decades at at time because of its massive borrowing power and because Social Security still generates enough money to pay benefits, she noted. Weinberg said that will end in 2017, when yearly Social Security contributions fall below what has to be paid out. At that point, obscure numbers will become unavoidable realities for taxpayers.
“At that point, they'll have to cut the benefits, raise taxes or borrow money,” Weinberg said.
Many more people live long enough to collect benefits then when Social Security was created in the 1930s, but the root of the problem is accounting, Weinberg said.
“It’s not a demographics issue,” Weinberg said. “The government’s doing a great job of smoke and mirrors.
“They’re taking the money out of your paycheck. They owe it back to you . They can’t record it as income because they owe it back to you.”
Pioneer Press Home
