> "Congress has written its own accounting rules — which would be illegal for a corporation to use" It stupid to treat a Federal Government (of any nation with

> "Congress has written its own accounting rules — which would be illegal for a corporation to use" It stupid to treat a Federal Government (of any nation with it's own sovereign currency) like a business when it comes to accounting. The nature of being the entity that creates a lot of the money (in the form of Treasury bills, banks create the rest via loans) means that doing this type of single entry accounting just doesn't make sense. Unfortunately this kind of article plays great for USA Today, where anything that terrifies the readership is great for business, like any other mass media outlet. To see what I am talking about, check out this peice.[1] I'll even quote the relevant part: > "When government spends and runs deficits, it credits private bank accounts more than it debits them, thereby increasing the savings of [dollar denominated] US financial assets of the non-government sector. In fact, non-government savings [...] can only increase if the government runs deficits, and they increase by that exact amount. The reverse is true of surpluses. Government surpluses necessarily reduce non-government savings by that exact amount as well. Therefore, the projection of a $5.6 trillion government surplus a few years back was also in fact necessarily projecting a $5.6 trillion drop in non government savings! For all practical purposes, this was a ludicrous projection, as there is no way private savings can be reduced by that amount without virtually eliminating everyone's retirement accounts and in the process eliminating private spending, employment, and income." [1] http://www.cfeps.org/pubs/sr/sr0402/sr0402.html http://www.cfeps.org/pubs/sr/sr0402/sr0402.html The rest of the policy proposals and case studies: http://www.cfeps.org/pubs http://www.cfeps.org/pubs By definition, running government surpluses means sucking more money out of the economy in tax revenue than it puts back in. At first this would be done by buying back all those treasury bills that make up the debt, taking trillions of savings away from private holders of said bills. Then, with nothing else to do with the excess tax revenue, the government would have to start buying assets, which would remove said assets from the private market, effectively sapping wealth from the private sector. In the end, all assets would be owned by the government. Of course, there isn't any real danger of this actually happening, but I'm trying to point out that the government will never get it's act together or be profitable like a business like so many people seem to desire. It just doesn't work that way. What matters is that the government has enough tax revenue to pay interest on the money it creates (treasury bills), which it does. In fact, interest payments as a percentage of tax revenue are at the lowest point in the last 15 years. On the other hand, I totally agree with the guy from Harvard: > "Accounting matters, the deficit number affects how politicians act." If it takes a big scary (and meaningless) number like the National Debt to keep them from going hog wild on the pork, then so be it I guess. As for Social Security and Medicare: http://www.cfeps.org/pubs/sr/sr0501/sr0501.html http://www.cfeps.org/pubs/sr/sr0501/sr0501.html