PoliticalChic
Diamond Member
- Thread starter
- #21
Work with me on this.Intragovernmental debt is still just debt, money the government doesn't have...
The government writes an IOU for $5T but doesn't take any money from anyone and doesn't give the IOU to anyone. The $5T can be money the gov't doesn't have but if it did then it would pay itself and still no money would have to move. As long as the government holds the paper and doesn't take in money, that IOU represents a promise to pay no one but the gov't itself. We can agree that it's meaningless, and we can also agree that it's not a debt that the taxpayers will pay to anyone but themselves.
Not so.
Is there a reason for the government to produce that IOU...?
Or are you suggesting that there is a department what is charged with creating meaningless fiduciary instruments.
After all, it didn't produce one that authorized a million McMansions that is has no use for, so it doesn't actually build same.
No, the IOU has a specific meaning: it promises to repay the money it has taken from the imaginary lock-box. As you may be aware, there are two distinct methods of accounting used by the government.
1. The Unified Cash Basis Budgeting. Just as with any one of us who writes a check, it is recorded as an expense, and when we receive a check, it is listed as income. Generally, government treats budgets in the same way. U.S. GAO - Search :: "Cash basis accounting"
a. So, a deficit means that the government spent more than it received during a specific fiscal year.
b. Now, using the cash basis method, you plan for a vacation in January by taking a $2,000 loan in December. This will appear as an asset in your bookkeeping- even though you will be obligated to repay this loan: it is actually a liability! This is exactly the situation that allowed Clinton to raid the Social Security Trust Fund, and claim this as revenue, even though it is an obligation to pay in the future. Beck, Balke, Broke, p. 172.
It is the reason for the IOU.
c. Now, watch the sleight-of-hand: using the money received now as revenue, even though it is supposed to be for paying future benefits! http://www.gao.gov/new.items/d05958sp.pdf
It is the Social Security surplus that helps offset the huge deficits!
d. So, by this method we can pencil it in when cash is paid: it gives a picture of finances at a given moment but fails to account for resources used but not yet paid for. Retirement costs of employees? No! This is the method used by the CBO for budgeting purposes.
The federal budget: politics, policy ... - Allen Schick, Felix LoStracco - Google Books
e. This is the preferred method to use if you wish to convince folks that things arent as bad as they really are.