(Reuters) – Another showdown between Republicans in Congress and President Barack Obama over debt could be in the making, and some investors are already taking steps to prepare for it.
Image: (Pete Souza/White House)
Members of the Institute for Truth in Accounting are often asked what important issues face the nation. Here’s a list of several we consider important.
1. The accumulating federal debt of more than $59 trillion dollars. This includes explicit debt, debt internal to the federal government and the net present value of the current statutory entitlements. What’s worse, the debt grows at $2-3 trillion each year. The debt grow $5 trillion in 2008 alone.
2. The aging baby-boomers will put extraordinary pressure on the nation’s economy as they begin to collect on the social programs to which they are entitled. The combination of increasing medical costs, the extension of life expectancies and the sheer number of beneficiaries makes this situation unsustainable.
3. The trade imbalance with the rest of the world. Essentially we are consuming more than we produce and the consequence is that we must spend about 1% of all the wealth America has ever accumulated to foreigners, every year. Symptoms of this problem include a falling dollar, higher oil prices, and a long-term decline in national living standards.
4. Accounting principles and metrics our government uses to explain our financial condition are deficient and do not provide objective and comprehensive understanding of our fiscal challenges.
5. The lack of solutions to solve these problems indicates the largest problem—a lack of political will to solve them. This leadership vacuum is the biggest challenge we face and it occurs because no constituency for sustainability exists.
Source: truthinaccounting.org/
Federal Debt: 1800-2035, Peter G. Peterson Foundation
Did You Know: Congress Exempts Itself From Including the Cost of Promised Retirement Benefits in Stating Debt?
Source: Institute for Truth in Accounting (IFTA), an organization dedicated to promoting honest, accurate, and transparent accounting at all levels of government.
Draft David Walker for President
Who We Are
The Institute for Truth in Accounting is an unaffiliated, nonprofit organization created by Sheila Weinberg, a former Certified Public Accountant, in 2002. Its goal is to ensure that public and private organizations provide truthful financial information useful to a wide variety of users. The Institute is dedicated to the development of standards and awareness that timely, informative and reliable information is the basis for knowledgeable economic and political decisions.
The Institute is particularly interested in governmental accounting, at all levels. As the world’s largest fiscal organization, the U.S. government must be the leader in providing complete and understandable financial information. State and local governments’ accounting standards no longer adequately report the scope and scale of obligations assumed by these jurisdictions.
SOURCES: Data from the Peter G. Peterson Foundation’s Long-Term Model of the Federal Budget, Baseline Assumptions; the Congressional Budget Office, Long Term Budget Outlook: June 2009; and the Office of Management and Budget, The Budget of the United States Government, Fiscal Year 2013: February 2012. Compiled by PGPF.
