CREATING A VIRTUALLY UNSOLVABLE PROBLEM
We need to correct the accounting so it reflects reality. The lack of proper accounting has allowed a virtually unsolvable problem to accumulate!!!!!
It is still true, as in the movie Dave, now the President, who called in an accountant to figure out the US Government "accounting books". His friend said:
“I’ll tell you, Dave. I’ve been over this stuff a bunch of times. It just doesn’t add up. Who does these books? I mean, if I ran my business this way, I’d be out of business. “
And we need to make it all understandable so that the people can see what goes on. For that we've devised The Report Card.
We need also to recognize that the politicians do not necessarily have education in how to run things and probably many lack basic accounting and economics knowledge. So we need to set up a system they understand, plus we need to educate them properly, so that they can contribute more to what is good for the country.
"UNFUNDED LIABILITIES" - SIMPLE BUT NECESSARY TO KNOW
We do not record some liabilities, where we owe money for something we are obligated to do (or for something we've purchased).
The biggest of these are what we owe for social security and medicare - which are parts of a huge freight train coming toward us, but we are not aware of it.
A simplified version of this is as follows:
A company has promised to pay retirement and medical for its retirees. Let's say there is just one, who is going to retire in 10 years at age 65 and is expected to live for 20 more years with retirement and medical costing $40,000 a year. The federal government requires us to set aside "reserves" to prove we can pay off what is owed. To the extent we don't set aside this reserve, the liability is "unfunded" - in other words we haven't paid for it yet with funds to cover it.
$544,000 will be required to produce $40,000 a year for 20 years.
Of course, we don't have to pay it come up with the $544,000 until 10 years from now, so we would deposit enough money to cover it, assuming we would earn 4% on the money until then. My unfunded liability to cover all of this is $367,500, which will grow at 4% for 10 years and equal $544,000.
If the company had to scramble all of a sudden to fund it 10 years from now, that could be a problem.
UNFUNDED LIABILITIES FOR OUR GOVERNMENT
Well, we have the same problem, with some slightly more complicate "actuarial" accounting, for Social Security And Medicare.
Besides our national debt to lenders to the government, we owe the following, actuarially calculated:
Unfunded liability for Social Security: $6 Trillion to $15 Trillion
Unfunded liability for Medicare: $85 Trillion
(Our total national production is $14 trillion and our tax and fee revenue, including social security and medicare taxes, is about $2 trillion. How is it possible to actually cover those? D'ya think we need to have a plan to solve this real soon, perhaps "yesterday". Politicians are either blind or slothful not to address this. I understand there is a political consideration, but we should not be sold down the rive. We need Dave's accountant badly!)
A LITTLE EXTRA EXCERPT THAT IS HELPFUL
"I love the scene in the movie, “Dave”, when Dave Kovic, acting as President, calls in his buddy, a nerdy accountant named Murray Blum, played by Charles Grodin, to find $650 million dollars in the budget to keep open shelters for the homeless. Do you recall what Murray says, reviewing the U.S. budget?
“I’ll tell you, Dave. I’ve been over this stuff a bunch of times. It just doesn’t add up. Who does these books? I mean, if I ran my business this way, I’d be out of business. “
However, in an hour or two over lunch (Blum loves bratwurst; no quiche for him), Blum finds the funds. Let’s face it: accountants are meat-and-potatoes kind of people; some lawyers can’t even spell that word…recall Dan Quayle. Accountants love the meat… they look at the numbers, add them up, and make certain they balance and whether or not one has the funds. Lawyers? Put two lawyers in a room, and you have a never-ending discussion…excuse me, debate. Put 100 lawyers in the Senate, and you have lots of endless discussions, and gridlock." Source
