We're Doing Fine, As Long As You Ignore the Liabilities

In a New York Times op-ed piece, Steven Rattner, managing principal of a New York investment firm, asks what the federal budget would look like if the government were bound by accounting rules similar to those followed by private businesses. The short answer: a hell of a lot worse than President Bush's projections of red ink fading to black within a few years. For one thing, the government would not be allowed to use the current Social Security surplus to cover the general fund's gap between revenue and spending, a constraint that would raise the 2006 deficit by $185 billion. Accounting for pension obligations to federal workers would add another $200 billion. But that's small change compared to the government's long-term Medicare and Social Security obligations, which total something like $39 trillion but are not included in the government's rosy picture of its own financial condition.