If the U.S. government used the same accounting methods that most U.S. businesses use, the real federal budget deficit for last year would have been 5 trillion dollars instead of 1.3 trillion dollars. So where does the huge difference come from? I think a simple illustration would be helpful here. When you go shopping, do you only count the transactions where you use cash, or do you also count the transactions where you signed on the dotted line and promised to pay later? Of course you count both of them. Well, the U.S. government does not count promises to pay later when calculating budget deficits. The “official” Obama budget deficit for 2011 was 1.3 trillion dollars, but according to USA Today when you add in the rise in liabilities for Social Security, Medicare and other retirement programs that adds another 3.7 trillion dollars to the total. Those are future financial promises that we have made that future taxes are not expected to cover. This analysis by USA Today squares very well with what analysts such as John Williams of shadowstats.com have been saying for years. The truth is that our federal budget deficits have actually been far worse than we have been told. (Read More...)