American financial scandal

Washington Post, Sunday, December 24, 2006; B06

The largest employer in the world announced on Dec. 15 that it lost about $450 billion in fiscal 2006. Its auditor found that its financial statements were unreliable and that its controls were inadequate for the 10th straight year. On top of that, the entity's total liabilities and unfunded commitments rose to about $50 trillion, up from $20 trillion in just six years.

If this announcement related to a private company, the news would have been on the front page of major newspapers. Unfortunately, such was not the case -- even though the entity is the U.S. government.

To put the figures in perspective, $50 trillion is $440,000 per American household and is more than nine times as much as the median household income.

The only way elected officials will be able to make the tough choices necessary to put our nation on a more prudent and sustainable long-term fiscal path is if opinion leaders state the facts and speak the truth to the American people.

The Government Accountability Office is working with the Concord Coalition, the Brookings Institution, the Heritage Foundation and others to help educate the public about the facts in a professional, nonpartisan way. We hope the media and other opinion leaders do their part to save the future for our children and grandchildren.

DAVID M. WALKER

Comptroller General of the United States

Government Accountability Office

Washington

(Hat tip to Sheldon Richman.)

UPDATE: At Cafe Hayek, Robert Cote observes in a comment:

"Total liabilities is a red herring. While I share a deep concern for accounting and deficit, your totalling liabilities without also anticipating revenues is misleading. Besides, a huge component of those liabilities are entitlements; medical and retirement that I know for sure I'll never see. If I'm not going to see any then they aren't ruly liabilities now are they?"

UPDATE (January 17, 2006): Ed Brayton has chimed on on this subject.