There’s an 800-pound gorilla on the presidential campaign trail, but none of the candidates is talking about it.That gorilla has doom written all over it, to the tune $55 trillion - and counting.
A quick perusal of the Web sites of Hillary Clinton, John McCain, Barack Obama, Mike Huckabee and Ron Paul reveals that not one mentions this huge and undeniable problem - the net unfunded liability of federal obligations over the next 75 years.
The usual suspects are behind this looming tsunami of red ink: Social Security, Medicare, Medicaid and public debt, as well as civilian pension and retiree benefits.
But aspirants for the White House won’t be able to deny it much longer - not if Truth in 2008 has its way.
Truth in 2008 is a new program of the Institute for Truth in Accounting, an organization dedicated to getting governments to accurately report their financial conditions. Though the institute has been focusing mostly on state governments, the new program is attempting to make truthful accounting an issue in the 2008 presidential race, and IFTA chief executive officer Sheila Weinberg is calling on accountants to help.
“We feel the public isn’t being given enough information to make a knowledgeable decision about which candidate to elect,” Weinberg said. “They’re out there making promises, but that’s only one side of the picture. They don’t tell us how much it’s going to cost or where we’re going to get the money or whether we’re just going deeper into the hole.”
The institute has sent a pledge to all candidates, asking them to agree to highlight the true financial condition of the federal government, provide an honest calculation of the costs of every campaign promise, present a plan for how those promises will be paid for, and discuss how much further in debt such promises put the country.
The institute is sending the pledge to campaign offices and congressional offices, but if there’s no response, institute members will try to contact candidates at public events.
“We are going to track those people down,” Weinberg said.
Truth in Accounting claims that the federal government and presidential candidates are pretending the debt stands at $9 trillion. The far more accurate number, the organization says, is $55 trillion - a figure so large there’s no way it can be paid off.
That incalculable total comes as a result of a “perfect storm” of fiscal contagions.
For example, interest on the national debt alone is one of the fastest-growing budget categories, at nearly $230 billion. Add to that the trio of entitlement programs better known as Social Security, Medicare and Medicaid, and according to estimates from the Government Accountability Office, the costs for this trio alone exceed projected revenue by more than $50 trillion over the 75-year period. To put that figure into layman’s perspective, it’s roughly 95 percent of the net worth of every American.
David Walker, who only recently announced plans to step down as U.S. comptroller general and head of the GAO, (see page 4) agreed that presidential candidates need to grapple with this issue.
“Serious presidential candidates need to demonstrate that they understand that our real economic challenges are not the ones that we face today but the ones on our horizon,” Walker said. “They should pledge to make fiscal responsibility and inter-generational equity a priority if elected president. They should not take anything, including taxes or entitlement reforms, off the table during the campaign, and pledge to work on a bi-partisan basis to achieve much-needed and long-overdue budget, Social Security, health care and tax reforms. If the next president follows this path, we’ll be able to do what it takes to keep America great.”
Walker had been raising a similar alarm on his “Fiscal Wake-up Tour,” a series of town-hall-style forums to discuss the federal government’s current deficit and the challenges posed by long-term demographic and economic trends. Weinberg is calling on accountants to speak up at the forums.
Roger Nelson, former deputy chairman of Ernst & Young and current chairman of the Institute for Truth in Accounting, warns that the unfunded liabilities crossed with a soaring trade deficit and the plummeting value of the dollar add up to trouble. “We agree with David Walker that our country is at a very important crossroads,” he said. “Sweeping this under the rug is going to be a disaster for our economy.”
Truth in 2008 is looking for help from concerned accountants willing to apply their special skills to the problem. One task is to calculate how much candidates’ promises will cost American taxpayers. “We’re working on that, but if we had more accountants to help us, we would be able to do more of the calculations,” Weinberg said. “We need to know how much their promises cost and the validity of their funding plans.”
Weinberg is also calling on accountants to attend the candidates’ public meetings and ask them how much their promises will cost and what should be done to alleviate the existing liability.
She also would like accountants to testify before the Federal Accounting Standards Advisory Board to support its fiscal sustainability project. The board recently shelved a project to require that liabilities such as Social Security and Medicare be included in the federal balance sheet.
Information is available at www.truthin2008.org and www.truthinaccounting.org.
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