The most recent audit presented to the Senate Budget Committee by the Government Accountability Office indicates the federal government will soon owe more than the entire U.S. economy produces.
The comptroller general for the Government Accountability Office, Gene Dodaro, testified before the committee and discussed the findings of his audit: “Fiscal Year 2015 U.S. Government Financial Statements – Need to Address the Government’s Remaining Financial Management Challenges and Long-Term Fiscal Path.”
The report indicated three major impediments that prevent the GAO from even expressing a reliably accurate opinion on the government’s accrual based financial statements. The are:
“(1) Serious financial management problems at DOD, which represented 30 percent and 15 percent of the government’s reported total assets and net costs, respectively; (2) the government’s inability to adequately account for and reconcile a significant amount of intragovernmental activity and balances between federal entities, which resulted in hundreds of billions of dollars in differences: and (3) the government’s ineffective process for preparing the U.S. government’s consolidated financial statements.”
Additional challenges cited in the financial report requiring urgent attention include: (1) the significant and pervasive government-wide issue of improper payments, which totaled over $1 trillion since fiscal year 2003, and (2) reducing the annual net tax gap, last estimated by IRS to be $385 billion.
According to Dodaro’s testimony, “We’re very heavily leveraged in debt. 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.”
“The highest in the United States government’s history of debt held by the public as a percent of gross domestic product was 1957, right after World War II,” Dodaro continued. “We’re on mark to hit that in the next 15-25 years.”
Dodaro reported that if Medicare cost controls fail and healthcare costs continue to increase, debt will rise much further. “These projections go to 200, 300 percent, and even higher of debt held by the public as a percent of gross domestic product. We’re going to owe more than our entire economy is producing and by definition this is not sustainable.”
The GAO proposed ways that Congress could consider for better linking decision about the debt limit with decision about spending and revenue at the time those [spending] decisions are made.
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