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Patricia Johnson: If Saddam's Hole Was Bad

If You Think Saddam's Hole Was Bad, Look At This!


By Patricia L Johnson

The US may never be able to prove the claim of WMD in Iraq, but it is definitely attempting to prove that Iraq was a danger by inventorying each and every weapon found. On March 1, the Department of Defense released the article "Iraqi Police Foil Terrorist Attack" (click here) and listed each weapon found down to the last five RPG rounds and a hand grenade.

When the government wants to prove a point, we find that there is no limit to the amount of information that can be collected, and accurately recorded, yet, when it comes to spending the taxpayers' money, our agencies can't seem to add 2+2 and come up with 4.

On March 3, an Oversight Hearing, before Chairman Todd R. Platts, was held on the General Accounting Office Audit of the Consolidated Financial Statements of the U.S. Government. Donald Hammond, Fiscal Assistant Secretary, U.S. Department of the Treasury provided testimony (click here) on the FY03 Annual Financial Report of the U.S.

The Financial Report of the United States Government for the Fiscal Year 2003 was prepared in accordance with generally accepted accounting principles (GAAP) using the accrual, rather than cash basis of accounting. [Under the accrual method of accounting transactions are recorded when a liability occurs as opposed to a cash basis of accounting where transactions are recorded when the cash is paid or received].

US revenues were down $81.7 billion, mainly due to lower tax collections, while costs were up $225.8 billion. This resulted in a net operating cost of $665 billion for 2003 compared to $365 billion for 2002, or an increase of $300 billion.

As distressing as the $300 billion increase may be, it certainly is not as disturbing as the "disclaimer of opinion" issued by the General Accounting Office following their audit. Audit opinions include "clean" meaning the information is reliable; "qualified" meaning certain weaknesses are present; "disclaimed" meaning sufficient information is not available to render a judgment; and "adverse" indicating the possibility of misrepresentation or fraud.

The GAO's disclaimer of opinion on the 2003 Financial Report was due to "material weaknesses in data and processes" (click here). Agencies were not consistently or properly reconciling financial transactions with other agencies. This resulted in an unmatched $163 billion and an unexplained $65 billion. When we're talking about billions of dollars, it's pretty meaningless because the majority of us can't relate to billions. [As a point of reference, the unmatched $163 billion is 2 billion over the total paid for all Medicaid beneficiaries during FY 2003]. (click here) to view the out of balance report.

The Financial Report indicates the full effect of all significant liabilities, stewardship responsibilities, and other commitments and indicates assets of $1.4 trillion versus liabilities of $8.5 trillion. Current accounting standards do not treat social insurance programs as liabilities, therefore Social Security and Medicare commitments are not included on the balance sheet.

In other words, the United States government owes slightly over six times as much in liabilities as it has in assets excluding Social Security, Medicare and debt held by government accounts. Because government debt of $2.8 trillion is an internal transaction between two government accounts, it is also not listed as a liability on the balance sheet.

The 2003 debt held by, or owed to, the public was the largest liability at 3.9 trillion. The public debt of 3.9 trillion and government debt of 2.8 trillion are the two major numbers making up the federal debt. On May 27, 2003 legislation was passed to permanently increase the federal debt to 7.4 trillion.

As of today the total public debt subject to limit is 7.0 trillion (click here) Based on projections, an increase in 2004 will, once again, be necessary.

President Bush may think the economy is improving, but the numbers tell a different story.

*************

© Patricia L Johnson 2004

Patricia Johnson is a freelance writer residing in the Midwest.


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