The Government Accountability Office (GAO) is supposed to be the federal government's independent watchdog. But the nation's finances are in such a mess that the watchdog doesn't know when to bark.
In December 2011, when the GAO released its annual Financial Report of the U.S. Government, it said it could not render a comprehensive opinion about the government's financial statements due to "widespread material internal control weaknesses, significant uncertainties, and other limitations." The agency cited three major problems with the federal government's bookkeeping: poorly prepared consolidated financial statements, problems with tracking and accounting for transactions and balances among various federal agencies, and "serious financial management problems" within the Defense Department that made its financial statements "unauditable."
Consolidated federal financial statements were not the only area where the GAO threw up its hands. The agency also reported that it could not provide any opinion on the "state of social insurance," which covers entitlement programs such as Social Security and Medicare, because of uncertainties regarding the growth of Medicare spending.
In a press release, Gene Dodaro, who runs the GAO as comptroller general of the United States, concluded that budget control legislation passed in the summer of 2011 did not "fundamentally change" the nation's fiscal outlook. "The comprehensive fiscal projections presented in the 2011 Financial Report," he said, "show that—absent policy changes—the federal government continues to face an unsustainable long-term fiscal path."