Lies, Lies and More (Government) Lies

by Charles Goyette,

They are at it again. Lying to us about the deficit, that is.

The polls all say that the American people have grown far more skeptical about their government. It’s a good thing. They are lying to us as though we are school children who have yet to master simple addition and subtraction.

The government’s Fiscal Year 2014 ended a week ago, on Sept. 30. On Oct. 1, fiscal year 2015 began.

We’ll get the final numbers on the 2014 deficit in a few days. But already the cheering has begun. For example the Daily Beast announced on Monday that “It’s time to retire the phrase ‘trillion-dollar deficit’ from our political vocabulary.”

Instead they tell us, the deficit is down two-thirds from its peak of $1.412 trillion in 2009. In lieu of the final number the Daily Beast rounds its estimate to $500 billion and declares victory.

It says that the giant iceberg that deficit hawks said the U.S. was steaming toward is actually melting.

We got more of the same from the President himself last week in a speech at Northwestern University. Obama wagged his finger at deficit hawks with their “mindless austerity” and “manufactured crises.”

Instead, said Obama, “over the past five years we’ve cut our deficits by more than half. When I took office, the deficit was nearly 10 percent of our economy. Today, it’s approaching 3 percent.”

Now, the deficit is what the deficit is. They can cook the press release, massage the numbers, or hide the spending, but at some point we have to revert to the real numbers.

What did the government take in during the fiscal year? And what did it spend? If it spent more than it took in, that’s the deficit.

Now, finding out how much the deficit actually grew — and how much more the government had to borrow during FY2014 — between Sept. 30, 2013, and Sept. 30, 2014 — is as simple as going to the U.S. Treasury’s website.

You can do this at home. If you Google the phrase “debt to the penny” you will be directed to a Treasury department page that allows you to enter specific dates and find out — to the penny — the size of the federal debt on that date.

So let’s do that, entering Sept. 30, 2013, as our start date; and entering Sept. 30, 2014, as our ending date. And here’s what we find:

The total public debt outstanding at the end of FY2013 was $16,738,183,526,697.32.

One year later, as the end of FY2014, it was $17,824,071,380,733.82. The difference is $1,085,887,854,036.50.

That is how much the deficit grew.

I know there will be special reasons that the deficit will be said to have grown by only five or six or seven hundred billion dollars instead of the full trillion dollars it actually grew.

But we have been down this road many times.

Remember the Clinton-era budget surpluses? The national debt actually grew each one of those years. But money was “borrowed” from the Social Security Trust Fund instead of from the public, which created the illusion that the budget was in surplus. There was no real surplus then, just as we have not bid goodbye to the trillion-dollar deficit in the budget year that just ended.

It’s a point that needs to be underscored for the world of finance. A sophisticated economy depends on information and thrives in a culture of mutual trust. When the state of economic affairs is concealed or contorted by the government, whether it’s the size of the deficit, the real state of unemployment, or artificially contrived interest rates, malinvestments result. Businesses waste precious resources in unsustainable projects. Individuals are misled about the resiliency of the economy, the vitality of specific sectors, and the prospects for their investments.

We are all made poorer as a result.

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