Real Deficit Numbers and Real Consequences 3 FEBRUARY 2010 NO COMMENT By Greg Hunter
We just finished 2009 with a record federal deficit of $1.4 trillion. Let?s think about that for a minute. The U.S. government says it is $1,400 billion in the red at the end of 2009. But is that the ?real? deficit number? The reason why I ask is the government uses accounting gimmicks to make just about every number it puts out look better than what it really is. For example, the most recent Consumer Price Index for inflation was officially 2.7%; but if you compute inflation the way Bureau of Labor Statistics did it in 1980, the inflation rate would be 9.7%. The same goes for unemployment. Officially, it stands at 10%; but if computed the way BLS did it prior to 1994, it would come out to 21.9%. (source: shadowstats.com)
I asked economist John Williams of shadowstats.com to weigh in on last year?s record $1.4 trillion of red ink for the ?real? deficit number. Williams told me, ?It was closer to $2 trillion because they knocked off $500 billion with accounting gimmicks.? Just because the government knocked off a half trillion bucks using an accounting gimmick, doesn?t mean we owe any less. The reduced number just doesn?t look quite as ominous. Another way to state the $2 trillion of red ink from last year is $2,000 billion! It is a very big number, even for the U.S.
In its latest budget, the White House is projecting $1.56 trillion in red ink, and that is another new record! What will the ?real? deficit be when the year is over? Williams says, ?With a weaker than expected economy, the 2010 deficit likely will top $2 trillion?? So, according to Williams, the government probably understated the ?real? red ink this year by another half trillion bucks. If this analysis turns out to be correct, then the government will have understated the red ink by at least $1 trillion in the last 2 years alone!
The full article is at http://usawatchdog.com/real-deficit-numbers-and-real-consequences/
