Accountant rips U.S. financial reporting
BARRINGTON COURIER-REVIEW — Jan. 2, 2003
BY KEN GOZE
STAFF WRITER
Building a political movement around the details of federal accounting standards reform has the potential to leave the most passionate accountants glassy-eyed, but Sheila Weinberg thinks her core message is simple enough: the federal government is keeping its books much like Enron did, and all of us will end up paying for it.
Weinberg, of Glencoe, says the government is vastly overstating how much money it has, ignoring massive obligations to future senior citizens and engineering a financial train wreck that will hit taxpayers in about 15 years. Through a group she founded in 2002, the Institute for Truth in Accounting, she hopes to recruit enough lawmakers and voters to head off the problem.
“The institute was founded due to my belief that the public and our elected officials need a more complete picture of our government’s finances,” Weinberg said.
Weinberg said the crux of the problem is that all of the budget surpluses reported and haggled over in recent years don’t really exist. The largest piece of the problem lies with Social Security. Money paid into the system should be set aside each year to cover costs of future retirements, but instead is used to pay out current benefits. Leftover money from year to year is treated like income, which falsely pumps up budget figures and surpluses.
Weinberg said the Congressional Budget Office projects surpluses of more than $1 trillion from 2003 to 2012, but it’s based on money which is basically borrowed from the future. The real number would be a $2.4 trillion deficit.
“There was never a point in time we had an actual surplus. They do what Enron did. They take the money they’re borrowing from the pension plans and record that as income,” Weinberg said.
Unlike Enron, the federal government can get away with the ruse for decades at at time because of its massive borrowing power and because Social Security still generates enough money to pay current benefits. Weinberg said that will end in 2017, when yearly Social Security contributions fall below what has to be paid out. At that point, obscure numbers will become unavoidable realities for taxpayers.
“At that point, they'll have to cut the benefits or raise taxes or borrow money,” Weinberg said.
Many more people live long enough to collect benefits than when Social Security was created in the 1930s, but the root of the problem is accounting, Weinberg said.
Efforts in the 1990s to seriously address Social Security issues were derailed as soon as surpluses were announced, and lawmakers from both parties have been debating ways to spend money they don’t really have, she said. Republicans have favored tax cuts and Democrats have wanted to spend the money on other programs.
Weinberg, who has a background as a certified public accountant, also worked with the Concord Coalition, a national budget watchdog group founded by former senators Warren Rudman and Paul Tsongas. Weinberg said the Institute for Truth in Accounting is taking a two-pronged approach to the problem. One is to issue a separate, understandable budget document as a counterpart to official reports.
The group’s other efforts have focused on reforming the Federal Accounting Standards Advisory Board which issues the accounting standards used by the government. U.S. Rep. Mark Kirk, R-10th, and eight others introduced legislation earlier this year aimed at making the board more independent, and several changes already have been made, Weinberg said. The board will have more public members, and board members will serve longer terms.
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