In the next few years, the federal government will owe more than the entire economy produces. And that may not be the worst of it.
The Washington Free Beacon reports:
Gene Dodaro, the comptroller general for the Government Accountability Office, testified at the Senate Budget Committee to provide the results of its audit on the government’s financial books.
“We’re very heavily leveraged in debt,” Dodaro said. “The historical average post-World War II of how much debt we held as a percent of gross domestic product was 43 percent on average; right now we’re at 74 percent.”
Dodaro says that under current law, debt held by the public will hit a historic high.
“The highest in the United States government’s history of debt held by the public as a percent of gross domestic product was 1946, right after World War II,” he said. “We’re on mark to hit that in the next 15 to 25 years.”
Another economic projection which assumes that cost controls for Medicare don’t hold and that healthcare costs continue to increase, shows debt rising even further.
“These projections go to 200, 300 percent, and even higher of debt held by the public as a percent of gross domestic product,” said Dodaro. “We’re going to owe more than our entire economy is producing and by definition this is not sustainable.”
Additionally, the audit found fault with the number of improper payments that should not have been made or were the incorrect amount. The audit found that in fiscal year 2015 there were $136.7 billion improper payments, which was up by $12 billion from the year prior.
The audit also called into question the reliability of the government’s financial statements. According to the report, if a federal entity purchases a good or service, that cost should match the revenue recorded by the federal entity that sold the good or service. The report found that this was not always the case and found hundreds of billions of dollars in differences between transactions between federal entities.
“The government-wide financial statements that the GAO audits tell us what came into the government’s coffers and what went out, what the government owns and what it owes, and if the operations are financially sustainable,” said Sen. Mike Enzi (R., Wyo.). “But can we trust the information in the statements?”
“GAO’s audit calls into question the reliability of the underlying financial data,” he said. “The sketchiness is such that GAO remains unable to even issue an audit opinion on the government’s books.”
According to the audit, these weaknesses will eventually harm the government’s ability to reliably report their assets, liabilities, and costs, and this will prevent the government from having the information to operate in an efficient and effective manner.
The GAO is now admitting what the Convention of States Project has been saying for years--unless we do something, our country is headed straight toward a fiscal cliff. We could support that kind of debt after WWII because our economy was being propped up by the war efforts. A similar debt-to-GDP ratio today could result in the end of our economy as we know it.
There is hope, but it doesn’t lie in Washington, D.C.--they can't even manage their own books.
A Convention of States--called by the people through their state legislatures--can propose a complete package of constitutional amendments that effectively restrain the out-of-control federal government. A balanced budget amendment combined with specific tax and spending limitations can ensure our country’s financial stability for generations to come. Thousands have caught the vision, and hundreds more join every day.