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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Srexley who wrote (718354)	12/15/2005 4:26:01 PM
From: DuckTapeSunroof	Respond to of 769670

GAO faults U.S. financial reporting By Robert Schroeder, MarketWatch Last Update: 4:03 PM ET Dec. 15, 2005 marketwatch.com{4F40C814-5788-4642-A4ED-0769B5765223}&siteid=bigcharts WASHINGTON (MarketWatch) - The U.S. government didn't maintain effective controls over financial reporting in the latest fiscal year, potentially skewering the accuracy of federal financial statements, a congressional investigative group found. In a letter to President Bush and Congress, Comptroller General of the United States David Walker said government accountants found "material deficiencies" in the federal government's financial statements for 2005 and 2004. "The federal government did not maintain effective internal control over financial reporting...and compliance with significant laws and regulations as of September 30, 2005," wrote Walker, who heads the Government Accountability Office. Walker said there were three major obstacles to evaluating the latest financial statements. First, he said, there were "serious financial management problems" at the Department of Defense. Second, the federal government could not adequately account for balances between federal agencies. Lastly he criticized the government's "ineffective process" for preparing its consolidated financial statements. Walker's letter was contained in the Financial Report of the United States Government for 2005. Walker also sounded a much more critical note about the country's long-term fiscal outlook than did Treasury Secretary John Snow in his own letter. "While deficits are never welcome," Snow wrote, "the 2005 deficit of $319 billion, when expressed as a percentage of gross domestic product, was lower than the deficits in 16 of the last 25 years." But, Walker said, "while the fiscal year 2005 budget deficit was lower than 2004, it was still very high, especially given the impending retirement of the 'baby boom' generation and rising health care costs." Walker also warned that the government must engineer "significant changes" in both spending and revenue to keep long-term deficits from impairing federal resources. Robert Schroeder is a reporter for MarketWatch in Washington. Copyright © 2005 MarketWatch, Inc. All rights reserved.

To: Srexley who wrote (718354)	12/15/2005 4:28:47 PM
From: DuckTapeSunroof	Respond to of 769670

CBO paints bleak fiscal picture By William L. Watts, MarketWatch Last Update: 3:18 PM ET Dec. 15, 2005 marketwatch.com{CF92C1EC-B283-4CF7-B5DE-2B186DD18DF4}&siteid=bigcharts WASHINGTON (MarketWatch) - Under most long-range scenarios, the federal government will see bigger deficits and skyrocketing debt unless policymakers take steps to rein in expected growth in Social Security, Medicare and Medicaid spending as baby boomers begin to retire, the Congressional Budget Office warned Thursday. "As health care costs continue to grow faster than the economy and the baby-boom generation nears eligibility for Social Security and Medicare, the United States faces inevitable decisions about the fundamentals of its spending policies and its means of financing those policies," the CBO said in its biannual Long Term Budget Outlook. The report's conclusions are little different than its last long-range report, issued in December 2003. In a speech at the New America Foundation, a Washington think tank, outgoing CBO Director Douglas Holtz-Eakin said the future burdens posed by federal entitlement programs are such that even in a world without hurricane relief, ongoing war spending, budget pork and the extension of recent tax cuts, "our country would face deficits as far as the eye can see and enormous fiscal challenges." In only one scenario in the report, in which federal spending grows much slower than average and revenues grow much faster than average, does the federal budget post a long-term budget surplus. But that scenario assumes bracket creep, in which real income growth pushes taxpayers into higher tax brackets, and the alternative minimum tax would combine to cause revenues to continually rise until they reach 23.7% of GDP in 2050, well above the range of 16.1% to 20.9% seen since 1951. It also assumes a reduction in spending that's unlikely unless there are significant changes in health policy, the report said. The worst-case scenario sees federal debt equal to 130% of GDP by 2030, growing steadily after that, the report said, noting that the forecast doesn't take into account the harmful effect long-term deficits would have on economic growth. Holtz-Eakin dismissed notions that future economic growth would be sufficient to close the long-term fiscal gap. "You can't grow your way out of this problem. It's just too big," Holtz-Eakin said. The report concluded that fiscal policy could be financially sustainable if the growth of health care costs slowed significantly from historical rates. But tax revenues would still probably need to be higher than they have been in the past, unless other spending growth is also curbed, the CBO said. If taxation is held at levels seen in the past, spending on programs for the elderly would need to see substantial cuts. Slowing growth of spending for defense, education, transportation, and other discretionary programs wouldn't be enough to ensure fiscal sustainability, the CBO said. Holtz-Eakin will leave his post at the end of the month to take a position with the Council on Foreign Relations, a think tank. The former chief economist for President Bush's Council of Economic Advisers, Holtz-Eakin has served as CBO director since 2003. William L. Watts is a reporter for MarketWatch. Copyright © 2005 MarketWatch, Inc. All rights reserved.