The budget deficit for Fiscal Year 2014 was only $484 billion. In 2015, it will rise to $583 billion, after which it will return to below the $500 billion mark.
That was one of the more ballyhooed aspects of the now-released budget from the White House Office of Management and Budget (OMB) for Fiscal Year 2015 as the Obama administration attempts to put on a facade of fiscal responsibility.
There’s only one problem. It bears little resemblance to how much money the U.S. Treasury will actually need to borrow to pay for all of the obligations of the federal government over the coming years.
In fact, in the 2014 Fiscal Year, the national debt rose by almost $1.1 trillion — not $484 billion — representing a $592 billion disparity between the headline deficit number and actual borrowing.
Not included in the $484 billion are off-budget borrowings, including $133 billion for direct and guaranteed loan accounts (mostly student loans), $1 billion for “Net purchases of non-Federal securities by the National Railroad Retirement Investment Trust,” “checks outstanding, accrued interest payable on Treasury debt, uninvested deposit fund balances, allocations of special drawing rights, and other liability accounts,” and a $278 billion “Change in debt held by Government accounts” representing cumulative surpluses in the Social Security, Medicare, and other government trust funds, according to OMB.
Further complicating matters, there is interest owed to those same Social Security, Medicare, and other government trust funds that totaled $158 billion, plus another $40 billion of interest that was paid to the Federal Reserve for its holdings.
Despite trust fund interest reportedly being returned to the U.S. Treasury, that money is not being saved at all. This money, along with excess payroll taxes, is then used to purchase yet more U.S. treasuries.
This puts the lie to the government’s reported “net” interest of $229 billion. According to OMB, gross interest owed on the debt was actually about $430 billion in 2014.
That additional interest owed to the trust funds requires real borrowing to be honored, therefore it represents a real liability to taxpayers. That’s why it’s ultimately included in the national debt.
But, sure, if you exclude all that, then yes, the deficit was only $484 billion in 2014.
Yet, this is merely an accounting sleight of hand — a decision by Congress long ago to include certain types of spending and borrowing on-budget, and others off-budget — all with the effect of disguising the true, dire state of the nation’s finances. It’s done by administrations of both parties.
We cannot expect Congress to truly address the debt when the government will not even be fully transparent about how much it is really borrowing on an annual basis. It’s time to get serious here. It’s time to level with the American people.
Robert Romano is the senior editor of Americans for Limited Government.
