From the UT McCombs Business School comes a very different take on what is really happening.      Released to Near Silence, the U.S. Treasury 2009 Financial Report Shows Dire Course.  

Michael Granof is the Ernst & Young Distinguished Centennial Professor in Accounting at McCombs. He is currently serving a five-year term on the Federal Accounting Standards Advisory Board.

If you listen to certain politicians and talking heads you might get the impression that the federal fiscal sky is falling. Unfortunately, unlike Chicken Little, they may be right.

The Treasury Department recently issued the 2009 financial report of the United States government. Whereas there is lots of talk in Congress and in the press about the federal budget, the annual report was released to near silence. That’s too bad, not only because the annual report is untainted by creative accounting but also because its message is too important to ignore.

That message is that the sky is indeed falling.

The 2009 federal balance sheet indicates that the government’s net position (total assets less total liabilities) is a negative $11.5 trillion, 12.3 percent worse than the previous year. But that’s just the tip of the iceberg. That negative balance excludes government obligations for social insurance programs, mainly Social Security and Medicare.

Unable to reach agreement as to whether social insurance should be included as a balance sheet liability, the members of the FASAB compromised, and thus, immediately following the balance sheet is a “Statement of Social Insurance.” In the 2009 annual report this indicates that the total present value of estimated social insurance expenditures over revenues is $45.9 trillion.

Hence, simple addition indicates that the total net position of the government is a whopping negative $57.4 trillion.

Full throttle ahead:

The message of the report is resoundingly clear. The federal government’s course is dire. Therefore, if, when the history of the current decade is written, it reveals that the American people and its representatives in Congress and the Administration failed to respond to the report’s warnings, then immediate future generations will have no doubt as to where to place the blame.

From a comment submitted by Diane Taylor on the original post:

“In God we trust – all others must bring data” – a quote from a man that required data and took his company in a few decades from $250.00 to many billions in worth. A man of great integrity. We have the data – now we need to accept personal responsibility and ask God to give us the National will to change .

Let’s see, what other dire messages are out there…US Military warns of oil production shortage by 2015.

The Joint Operating Environment report didn’t go quite as far as saying it was time to start dressing in leather, eating canned dog food and carrying sawed-off shotguns, but it didn’t exactly paint a rosy picture of what post-2015 America could look like. “One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest,” the report points out. Ruthless conquest? They might as well say “massive oiled-up dudes wearing hockey masks and riding around the desert on tractors.“

We’re not sure where the U.S. Joint Forces command got their numbers from, but their conclusion does seem to jibe with a peak oil assessment by a Kuwaiti study and an estimate by Richard Branson’s energy taskforce, all of which means we’re off to practice our welding skills.

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