Fiscal Policy: Question: What do you call it when a major organization"s financial statements are so deceptive and badly kept that even its auditor refuses to render an opinion? Answer: The federal government.
That"s right, the U.S. Government Accountability Office (GAO), the federal government"s accountant, refused to hand down an opinion of the federal government"s financial statements for 2016 "due to deficiencies that have plagued prior financial statements — persistent financial management problems at the Department of Defense (DOD), the government"s inability to account for and reconcile certain transactions, an ineffective process for preparing the consolidated financial statements, and significant uncertainties."
No question that, just like Enron, if this happened in the private sector, the executives in charge would either be fired or tried for fraud, and the shareholders would suffer major losses. But U.S. taxpayers pay little attention to the problem since they don"t know how bad it really is. And the sad thing is, no one does.
The Department of Defense, the Department of Housing and Urban Development, and the Department of Agriculture were all singled out by the GAO for criticism over their financial management.
But to be fair, controls seem to be quite lax everywhere in government.
In particular, the report cites the estimated $144 billion spent by the federal government in 2016 on "improper payments," a gain of 5% from 2015. It goes on to criticize "weaknesses in internal control" over such things as information security — repeated incidents of Chinese and Russian cyberhacking and Hillary Clinton"s home-brew email server come to mind — and problems with "tax collection activities."
But by far the most worrisome weakness the GAO cited is the unbridled growth in entitlements, especially Medicare costs, and the overly optimistic assumptions made in the nation"s budgets about them. This failure places our ability to assess the health of our nation"s future finances in doubt.
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