whembly wrote:Do you subscribe to the basic idea that you can use basic market accounting on government entities?
Absolutely. I've worked at a fair few not-for-profits and government entities, and moving to IASB has always been an improvement, in both control and transparency.
I mean, there's some technical issues where common accounting practice stops making sense, a classic example I've experienced is land under roads - by the rules of IASB you're supposed to recognise land under roads as an asset for every local government. The result of which in one council I worked for was that the asset base went from about 15 million to about 180 million - producing an equity figure that was just meaningless. This is because the assumptions on that piece of law (that it is land you pay for, could sell for some other purpose if you want, and would be a cost you'd have to incur for any similar future expansion) don't apply to local government.
And in the same way, just totalling up future entitlements at the current moment also makes little or no sense. Because unlike a private company, where those entitlements are granted as part of compensation for work already performed, in government it is an expectation that money will be raised on future employees to cover the healthcare and other entitlements of current payees. So the only meaningful exercise is to account for both expected future payments and expected receipts to determine if there's going to be a shortfall.
But even that's an exercise with massive limitations, limitations so great that including them in accounting statements would be wildly misleading. Because among other things, figures included in financial reports must be reliable, and simply put forecast figures outside of about 5 years are pretty horribly unreliable. So much so that a lot of economists today argue that forecasting outside of about 5 years is a waste of time.
Besides... where do you see the "In other news, to meet all future entitlement spending the US will have to dedicate a bit under 10% of GDP towards it. Which is almost kind of boring, when you presently commit about 8% to it.? I'd be interested in seeing sources that supports that statement.
My back of the envelope calculations was a little off, but here's a WSJ citing the original trustee report that Cox and Archer were freaking out about;
"Looking just at Medicare, we would need to increase taxes by 4.3 percent of GDP over the levels set by current law. Today, it would be about $600 billion. That is a lot, but it is certainly doable—and it’s a lot less than $8 trillion."
http://truth-out.org/news/item/13139-entitlements-scare-tactics And I don't mean to imply that's a tiny number - increasing by my figure of 2% of GDP, let alone the 4.3% in the WSJ piece, is a major piece of policy and a considerable burden on future taxpayers. But that's all it is, and seen in the light of the chicken little "86 trillion we're totally screwed slash entitlements" tone of the original piece....
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easysauce wrote:sebster how on earth can the USA even direct a % of GPD towards paying off a debt....
its gross domestic product, IE a measure of output, its not actually a solid resource that is under the whims of the fed to control.
what the fed/state govmnt's do have is federal and state tax revenue to spend on whatever it is they wanna do, which could be schools, paying down the debt ect ect but tax revenue is substantially less then total GDP.
Of course, but it is a portion of GDP, and that portion can change, and the way in which it is commonly described is as a percentage of the total.
thats 53,000 per citizen (148,00 per taxpayer)
the usa's assets are worth 102trillion, its unfunded liabilities are 125 trillion
Yeah, see, that's accounting gibberish. Because, as I already explained in the post you're replying to, you can't add up future payments out, without also including future payments in to the system. It would be like hiring a new employee and writing down a liability for the $1,000,000 in salary and benefits you're going to pay him over the 20 years he'll work for the company... without also including some kind of asset for the work he's going to produce over that time.
