The sheer size of the fiscal hole that the Obama administration is digging us into, or burying us within, is mindboggling enough. But, that isn’t stopping them from purposely adding to our confusion as they try to dig the hole deeper.
Tom Blumer exposes the tomfoolery at his valuable everyday read Bizzyblog.
Until now the US Treasury has hidden the size of our deficits by including Social Security taxes, and treating them as if in a Trust Fund although there is none and the monies have been spent, so Social Security is actually in negative cash flow within the next two years.
Now Blumer finds the Treasury Department under Wall Street-import Tim Geitner bringing along the tricks that sank Wall Street. The Treasury is now reporting the deficit of receipts versus expenditures as $175-billion less between last October and March. How? The Treasury is somehow calculating a Net Present Value of its TARP bailout expenditures, in other words what they think they’re going to be worth.
As Blumer points out:
Mixing hundreds of billions of dollars of NPV into what has essentially been a cash flow report turns the Monthly Treasury Statement, and deficit reporting in general, into an exercise that will become not only become ever more difficult to comprehend, but one that will also be routinely subject to political manipulation. Judgments as to what discount rate to use, how collectible loans are, and even what should and should not be considered an “investment,” will have multi-billion dollar impacts on the publicly reported deficit. NPV might even directly affect policy. Why should Geithner or Obama allow banks chomping at the bit to get out from under TARP to do so, when their repayments will only increase the reported deficit? Already, the administration, which has projected a fiscal 2009 deficit of over $1.8 trillion, has avoided the political embarrassment of estimating a shortfall that would round off to $2 trillion using true cash-flow reporting.
Hope ‘n Change requires prestidigitation, otherwise known as quick fingers, picking our pockets.
