In the early 1990s, toy maker Mattel got into hot water for manufacturing a talking Barbie doll that warned children: “Math class is tough.” Yet 20 years later, if we could pull their string, most politicians would probably say just that.
It’s budget season in Washington, D.C. (actually budgets were due months ago, but better late than never) and the White House is trumpeting a budget it insists will “cut” federal spending. Even on big entitlement programs.
The Obama administration claims its budget would reduce the deficit by $1.8 trillion over the next decade. This isn’t exactly accurate. Even after the much touted sequester (which the White House promises to replace with this new spending proposal) federal spending would actually increase over the next decade.
Indeed, when politicians talk about spending cuts, they generally mean reductions in how much more they intend to spend in the future. This year’s spending always seems to be a floor that politicians don’t dare go beneath, even though that’s exactly what a “cut” is, and even though most Americans have had to make actual “cuts” in their personal spending in recent years.
Perhaps Washington’s problem stems from the fact that it doesn’t keep very good books. In his book, Hamilton’s Blessing, historian John Steele Gordon writes about the national debt. One reason it’s grown so large, he points out, is that the federal government doesn’t use proper accounting principles.
“To this day the government makes no attempt to determine even so basic a measure of efficiency as the overhead of any of its vast array of departments, bureaus and agencies,” Gordon writes. “And the U.S. government still doesn’t use double-entry bookkeeping. It keeps its books the way you and I keep our checkbooks.”
One big problem with the government’s outdated accounting is that it doesn’t bother to keep track of the big spending it has promised (in our names) in the future. “The federal government’s unfunded pension obligations, for instance are in the trillions but don’t show up in the books at all,” Gordon writes. That means Social Security, and doesn’t account for the government’s other financial responsibilities.