'02 Deficit Doesn't Show True Costs
The federal government, if it used an accounting method preferred by Federal Reserve Chairman Alan Greenspan, would have turned in a deficit of $365 billion in 2002, twice as big as the official budget deficit number for last year: $158 billion.
The larger figure, included in a Treasury report yesterday, is based on a method of accounting in which expenses are booked when they are incurred, not when payments are made....
"Accrual-based accounts would lay out more clearly the true costs and benefits of changes to various taxes and outlay programs and facilitate the development of a broad budget strategy," Greenspan told Congress in February...
(...)The government has put out reports on its financial status based on the accrual method since 1998, following up on a directive by Congress....
Would someone care to enlighten me? How could the official deficit be deemed 'official' if there was a 1998 directive to use the accrual method? Is a congressional directive non-binding? Does this smell like Enron?
posted by Cyndy