- Hardly anyone noticed but the Federal budget deficit
rose to more than a half-trillion dollars last year.
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- That's not a typo. My typing is just fine.
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- And that incredible figure comes from no less an authority
than U.S. Treasury Secretary Paul O'Neill.
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- If you've been following the newspapers lately you've
probably noticed that Republicans and Democrats have been squabbling over
the expected budget surplus that suddenly disappeared. The politicians
are also bickering over how this country will manage the sharp increase
in Federal spending that will be required in the war on terrorism.
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- The hand-wringing has been over the fact that the government
expected $75 billion more in tax revenues this year than actually arrived.
With that revenue shortfall, the federal budget deficit - the one elected
officials are publicly worried about - will be $121 billion and not the
$46 billion upon which projections were made.
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- Forget all that. That's chump change.
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- What I've stumbled upon is shocking - both for the information
provided and for the way in which the news was delivered.
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- Carefully hidden on a Treasury Department Web site is
an undated letter from Secretary Paul O'Neill that puts the deficit number
last year at quadruple what Congress is worried about. Here are O'Neill's
written words in a "Message From the Secretary Of The Treasury:
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- "In five years, we have made considerable progress
but still have much to accomplish in order to reach our goal of timely
and useful financial reporting," O'Neill wrote.
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- He then goes on to explain what's really happening.
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- "Accrual based financial reporting is critical to
gaining a comprehensive understanding of the U.S. Government's operations.
For fiscal 2001, our results were an accrual-based deficit of $515 billion
in contrast to a $127 billion budget surplus reported last fall,"
said O'Neill.
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- Five hundred and fifteen BILLION dollars. That's on a
total federal budget of $2.1 trillion.
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- To put this into perspective, that would be like your
family borrowing one in every four dollars its spends. Or, more accurately,
it is like you putting one dollar in four on your credit cards and never
paying it back.
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- O'Neill, of course, is a former businessman. And in this
day and age of Enron-type accounting tomfoolery it's nice to see at least
one public official trying to get the government to practice the honesty
that it preaches to companies.
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- But don't go thinking that O'Neill or Washington really
wants you to see this stuff. This letter, I suspect, was simply put on
the record so Washington can later deny hiding anything.
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- As far as I know, this letter was never made public in
the conventional way.
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- And here's what you have to do to find it: Go to www.USTreas.gov,
click on "Treasury Bureaus" on the left, then click on "financial
management services."
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- Once you are there, click on "Financial Report of
the U.S. Government." Download it. Now go to page 5, which you can
only accomplish by fiddling in just the right way with the bar on the right.
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- Your search has now led you to the hidden treasures of
O'Neill's letter.
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- Washington, of course, doesn't practice accrual accounting
which is the Generally Accepted Accounting Principle used by most honest
businesses.
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- (We'll leave the matter of pro forma accounting and its
shortcomings for another column.)
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- The government manages to make its budget look better
by taking the surplus from trust funds like Social Security and using that
money to pay current expenses. The Social Security cash is replaced with
government I.O.U.s which might - or might not - be paid back later. (Also,
another column.)
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- But O'Neill apparently thinks accrual accounting gives
a better picture of Washington's financial health, despite the humongous
deficit it embarrassingly reveals.
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- The Treasury Secretary ends his letter by saying, "I
believe that the American people deserve the highest standard of accountability
and professionalism from their Government and I will not rest until we
achieve them."
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- Well, the Treasury Secretary is going to be a very tired
man because honesty just isn't in vogue in Washington.
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- Please send e-mail to: jcrudele@nypost.com
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- http://www.nypost.com/business/47855.htm
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