Government Debt Accounting Manipulations

The US Government and General Motors both have stupidly enourmous health care and retirement obligations. Even if you only intend to read the Comics Section, it is nearly impossible to pick up a paper without being confronted by an article on how GM lost over $10 billion last year, is facing possible bankruptcy, and doing everything they can to try to stay afloat. But the federal government's obligations don't seem to covered with the same urgency.

As David Broder points out recently, this is because of the way the government accounts for its spending. The Feds don't count future obligations incurred during the period as part of the deficit. If you count the real different between money received and new obligations and expenditures for last year, the budget deficit would be $760 billion. $319 billion sounds bad enough - $760 billion is much worse.

The federal government (rightfully) forces GM to provide an accurate measure of their financial situation by providing numbers that reflect all the obligations the company has. That (in addition to not so hot current sales) is the reason for the $10 billion loss and all the concern over GM going bankrup. But the government does not force itself to operate under the same rules. And the government's budget problems thus appear half as large they actually are - with no one much interested in doing anything about it.