Feds Use Enron-Style Accounting to Hide Deficit

Those are the findings of one of the rare CPAs to have served in Congress. Former Rep. Joseph Dio Guardi, R-N.Y., outlines the full story in an interview with NewsMax.com.

When he was a member of Congress is the late 1980s, Dio Guardi succeeded in getting legislation enacted providing for an independent chief financial officer. The only problem, he says, is that by the time the measure got through the compromises and watering down that inevitably accompany the legislative process involving 535 lawmakers, the CFO position ended up as part of the Treasury Department with some responsibilities to the Office of Management and Budget.

This is like putting “the fox in charge of security in the chicken coop,” the Westchester (suburban New York City) Republican complains.

Not that he distrusts the Bush administration (he believes the president’s tax cuts would give the economy a badly needed jump start). Dio Guardi wanted to make the CFO a uniquely independent Cabinet-level job, confirmed by the Senate, with fixed terms that do not necessarily track the term of any sitting president. Otherwise, he believes, there is a built-in “conflict of interest.”

When you add up all the “trust funds,” “lock boxes,” “off budget” commitments, military and civil service pensions, student loans and government-chartered enterprises such as Fannie Mae and Freddie Mac, the debt is “not just 6 trillion,” but “more like 20 trillion,” if you include “all of our commitments, not just the cash we’ve laid out.”

Former Congressman Dio Guardi says the slow fiscal decline of the U.S. can be likened to the effect of high blood pressure on the human body.

“It doesn’t kill you in one day. It puts so much pressure on the body that over time, it wears you down. Some people get strokes. Some people get heart attacks,” he told NewsMax.

The CPA sees the U.S. heading for the fiscal equivalent of a “stroke” or “heart attack” unless it straightens out its Enronesque accounting system.

The moment of truth will come, the New Yorker believes, either when Social Security goes broke or as a result of any one of several other disasters that are waiting to happen.

What about those who are in charge of the books? Are they cognizant of what’s going on and millions of ruined lives that would be affected? More on that later.