Yesterday, the President of Brazil, Dilma Rousseff, was impeached and removed from office. The formal charge was manipulating the federal budget.
Imagine we had such a practice here in the United States. We’d have no one left in Congress. And the White House would be sitting empty.
This Congress and this Administration as well as those going back six decades have been deliberately manipulating the federal budget by skillfully using language to keep future obligations off the books. This is no different from the practice used by the Enron Corporation before it was discovered, at which point its executives were tossed in jail.
I’ve always thought that Enron learned its creative accounting from Uncle Sam. As I describe in my platform book, pass the generational buck — the practice of buy now and let your kids pay later — has left our children with an actual national debt, called the fiscal gap, that’s almost $200 trillion large! This is over 10 times larger than the bogus “official” government debt our government is publicly acknowledging, which both Trump or Clinton routinely reference.
To his great credit, Senator Kaine, Clinton’s running mate, co-sponsored The Inform Act, which you can read at www.theinformact.org. This is a bi-partisan bill, which I largely drafted, to force our government to do long-term fiscal budgeting, called infinite-horizon fiscal gap accounting. This accounting puts all the government’s I.O.U.s, no mater what they are called, on the books. The fiscal gap is a net measure since it takes into account the taxes and other resources available to pay Uncle Sam’s bills.
An example here is Uncle Sam’s obligation to pay me and the other almost 80 million Baby Boomers our Social Security, Medicare, and Medicaid benefits over the next 50 years. None of these obligations are included as part of official U.S. government debt. Paying for future defense expenditures is an example of another spending commitment that needs to be put on the books.
At www.theinformact.org, you’ll see that a Who’s Who of economists have endorsed infinite horizon fiscal gap accounting. This list includes almost all of the American Nobel Laureates in Economics. It also includes former high-ranking government officials, like Secretary George Shultz.
Let there be no mistake. The U.S. government’s malfeasant fiscal bookkeeping, developed and refined by decades of self-serving politicians with little regard for the next generation, is alive and well in Washington. This practice of hiding the fiscal truth has driven our country absolutely broke and is leaving our children with a fiscal disaster that threatens to completely ruin their economic lives.
I’m the only Presidential candidate who is speaking openly about the fiscal gap and its implications for our children. Bernie Sanders said he cared about the next generation, but he uttered not a peep about the fiscal gap during this entire campaign. He knows full well about this method of accounting and what it shows because I testified to him about it at the Senate Budget Committee before he ran for the Presidency. If we can’t trust Bernie Sanders to tell the truth about our fiscal condition, for whatever reason, we certainly can’t trust Trump or Clinton. And, indeed, they too have not said a word about the fiscal gap, nor its implications for our children.
Were I asking the Trump and Clinton domestic policy questions in the upcoming initial debate, my first such question would be, “Candidates, how large is the U.S. fiscal gap and how will you eliminate it?” (I will, btw, participate in the first debate by providing answer in this space to the questions posed to Clinton and Trump. You’ll be able to judge whose answers make most sense.)
The press has been complicit in our government’s fiscal child abuse. As a group, the press has chosen not to learn how to count when it comes to fiscal matters.
Stated differently, the press is content being spoon fed totally misleading debt figures by Congress when virtually the entire economics profession is on record saying, “No, that’s not the way to measure federal debt. The right way is the fiscal gap, the fiscal gap is 10 times larger than the figure you are reporting and represents an economic time bomb that we are dropping in our children’s laps. Do your homework or quit your job. Reporting falsehoods is not why you attended journalism school.”
The Inform Act, which has yet to be passed, requires, among other things, that the CBO Director produce an annual infinite-horizon fiscal accounting. The current CBO Director is Keith Hall. Not only has he failed to do infinite-horizon fiscal gap accounting. He has kept the CBO staff from producing the long-range budget forecast, called the Alternative Fiscal Scenario, which is needed by private researchers, like myself, to construct the fiscal gap. So we know that the fiscal gap in 2015 was $199 trillion. We don’t know what it is for 2016. I suspect it’s a good deal larger, which is why Keith Hall isn’t calculating it.
Keith Hall and I have had an email exchange about his decision, which I find absolutely despicable. He claims that the CBO works for Congress and that no one in Congress is interested in knowing the size of our country’s infinite-horizon fiscal gap. Well Senator Kaine is certainly interested. So let me publicly call on Democratic Senator Kaine to formally request the CBO to do infinite-horizon fiscal gap accounting and to do so immediately. Let me also publicly call on Republican Senator Thune, who co-sponsored The Inform Act to formally request the CBO produce a 2016 fiscal gap accounting. Let me also publicly call on Paul Ryan, with whom I’ve frequently discussed our fiscal gap and long-term economic condition, to publicly request that Keith Hall do his job.
Indeed, let me ask all members of Congress to stop what they are doing and pen this brief note to Keith Hall saying,
Dr. Hall, the infinite-horizon fiscal gap is our nation’s primary measure of its fiscal condition. The Congressional Budget Office’s overarching responsibility is to advise the country on its fiscal condition. In not doing fiscal gap accounting, you are in dereliction of your duty as CBO Director, endangering our country, and placing our children at risk of covering massive bills for which current adults are responsible. Consequently, I’m asking you to do what the economics profession, including 17 U.S. Nobel Laureates is saying to do — measure and report our country’s infinite-horizon fiscal gap. Director Hall, it’s high time for you to do your job, not “follow orders” and partake in a decades-long conspiracy arranged by politicians to hide the true magnitude of our nation’s fiscal insolvency.