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Is it Okay for the Government to Cook The Books

Business has it rough compared to the government!  So I have this question “Is it Okay for the Government to Cook The Books”?

First let me say what Businesses aren’t allowed to do!

  1. Manipulate the bookkeeping records to alter their financial statements.  In Accounting, this was called “cooking the book” or creating accounting, and this process was often used to change the bottom line depending on what a company wants their financial records to state.  It goes both ways, sometimes a company (especially private ones) want the numbers to show little profit so they don’t have to pay high taxes.  On the other hand, a company will inflate Sales and other income sources to make their stock more appealing to investors or potential buyers of the company.  Both forms of manipulation are against IRS rules and basically fraud (if my memory serves me correctly).  The excerpt at the end of this article sounds a lot like cooking the books to me.
  2. Now granted that I’m not a lawyer, I believe the employers aren’t allowed to borrow from the employee pensions plans that exist at the company.  I believe this is a no-no that history has proved to be a horrible move!  But ironically it’s not stopping the government from borrowing from the federal employee pension fund.  Oh, the federal employees don’t have to worry about their retirement nest because if there is a shortcoming in the “federal employee pension fund”, you can bet your bottom dollar that it would be a priority for the government to refund.  On the other hand, with Social Security… well we all know that state of that public (as in us) fund is doing.

Read the yahoo article titled “US taps pension fund to avoid passing debt limit” to read the full article, but below is the except that explains how it sounds like the government may be cooking the books?

WASHINGTON (AP) — Treasury Secretary Timothy Geithner says the government has begun borrowing from the federal employee pension fund to keep operating without surpassing its debt limit.

Geithner says in a letter to congressional leaders that the move will free up $156 billion in borrowing authority while Congress debates increasing the $16.4 trillion debt limit.

The government reached its borrowing limit on Dec. 31, but began using bookkeeping maneuvers to keep from surpassing it. Geithner has told congressional leaders that Treasury expects to exhaust those measures by mid-February to early March.

What say you?  It kind of reminds me of that old saying “Do as I say, not as I do”.

Don

5 Responses to Is it Okay for the Government to Cook The Books

  1. Just amazing how much shit the gov’t can do…they make up a system of “budgeting” called paygo which makes sense and then just completely disregard it OR their accounting uses growth rates over the next 30 years to justify the spending. It is nuts.

    • I was shocked when I read the article on yahoo. I have to admit, I’m a little disappointed both in the government and the the big press for letting oddball things like this happen.

      Kind of feels like kids are running the government than adults. Time for them to put on their big boy (or big girl) pants.

      Probably it’s always been this way, but not so much in big media as now and not so one sided. Nothing like being brainwashed instead of thinking what makes sense…

  2. Borrowing from a pension is a bad idea for regular people and should be illegal for businesses and governments.

    I live next door in Canada and your governments’ financial indecisiveness is messing with the world’s financial stability. Can you tell them to get it together? I thought that once the election was over they would work together and get down to business but instead the Republicans seem to be starting the run up to the next election.

  3. Absolutely not! I think the elected representatives should take full responsibility for their actions. I’m originally from Zimbabwe and our country fell into the worst Hyper-Inflation known in History! Crippled the economy and made the Z$ worthless.. I blame the government for that!!! Thank god I live in a country that is trying to get out of this debt bubble!!

    • Yes, that’s incredible sad. The only comparable country I can think of with such crazy hyper-inflation was German after their wars.

      I try to explain how inflation can be a wealth killer, but it seems many of my friends don’t get it. Hyper-inflation is also one of the reasons that everybody should have a least a little money invested in foreign investments.