Thursday, February 16, 2006

Two Sets of Books

We hear a lot of talk about cutting the deficit in half. In fact they have talked about it as far back as I can remember. I am 49 years old and I simply cannot remember a surplus year, can you? Who has been running this country, the politicians or the voters? I hear people complain, but do we ever take action?

There are two sets of books our politicians like to keep, the General and Unified budgets. The Unified Budget includes every government expense while the general budget excludes social security and Medicare. Social Security has its own dedicated tax, which by law cannot be used to pay for anything but Social Security costs, United States Code Title 42, Chapter7, Subchapter VII, Sec. 911 (a). Social Security can buy US Treasuries just like you or I, but the money must be repaid. Currently the Social Security Trust fund owns $1.6 Trillion in Special US Treasuries, which is included in the $8 Trillion National debt.

Politicians like to use the Unified Budget because they can show a lower deficit number. For example in 2004 Bush and our Representatives passed a Unified Budget resulting in a $553.6 billion deficit. The problem is they included Social Security and Medicare taxes as well as the interest their trust funds earned, which are dedicated to paying Social Security and Medicare costs, not general budget items. Excluding these dedicated tax revenues and interest payments, the General Budget deficit was $726.1 Billion. Who wants to report bad news to those you represent? We might not vote for them in the next election. Then again, maybe it is us, we simply do not want to hear the bad news and keep asking for more government services.

In 2005 there was Katrina and now we have the Rx Medicare drug program. The deficit this year is going to be what, $800 Billion? Interest on the Debt in 2005 was over $450 Billion or 40 cents of every dollar you pay in Federal Income Taxes. In 1952 only 16 cents went to pay interest on the debt.

The problem is, they could eliminate the unified budget deficit and we would still have a very large general budget deficit. Its time we laid off these fuzzy math politicians for our sakes as well as our children. Can anyone just say no to two more years?

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