The federal government looks at things differently. Having run up the national debt $421 billion during fiscal 2002, the government claims that it had a mere $159 billion deficit.

You know something is screwy right off the bat, don't you? Unless you swallow the story that government accounts are so complicated the average man can't hope to understand them, your public DefCon warning should immediately move up a notch. Government budgets are the same as your own. The numbers are enormous, but that's the only difference.

First of all, the federal government is a not-for-profit organization and, therefore, required to bring its accounts to a zero balance every year. The only way they can move money from one fiscal year to another is in a trust fund. The government has 14 real trust funds, with their own Thrift Savings Plan the largest at about $44 billion, but unless you are a narcotics dealer or one of the Indians who successfully sued the government none of the others hold any of your money.

If politicians were honest, they could have at any time put your surplus retirement, health care and other entitlement money in real trust funds, but they didn't.

The government has about 154 other debit black hole accounts that they deceptively label as “trust funds.” These have about as much resemblance to real trusts as you resemble the man in the moon.

All of these 154 accounts are under the "Intragovernmental Holdings" side of the national debt. They never hold anything but debt markers. They currently account for $2.7 trillion or 43 percent of the national debt.

Most importantly, 94 percent of the total markers in "Intragovernmental Holdings" are held by 20 entitlements like Social Security, Medicare, and others. Entitlements are the bulk of this debt with the other six percent represented by perks for politicians and bureaucrats or their cronies.

If any of these accounts cash-in their debt markers, the money will come from the general fund of the Treasury that holds current tax receipts or money borrowed honestly from investors who contract to loan the government money.

How we incurred this debt is a story in itself, but not today's subject. Essentially, we bought it. We gave the government surplus money and they gave us debt in return.

Budgets & Deficits

The annual deficit, as they calculate it, is the amount that the government goes beyond the budget for the year. If the deficit for fiscal 2002 was $159 billion, then that's the amount the government claims to have gone "over budget" on their books.

Currently, the government has a budget hovering around $2 trillion. Those are the tax receipts predicted for the fiscal year. Congress and the Administration, with the help of many committees and the CBO, GAO, and OMB, work years in advance to predict what their revenue will be and decide where they'e going to spend the money. That's the budget.

Sometimes, like today, we go deeply into the new fiscal year without a final resolution on a budget. In that case, the government precedes on "continuing resolutions" that mean nothing more than that they operate on last year's budget until the new one is decided. No "shutdowns" ever occur for this reason, despite what the news nitwits say.

Once the budget is decided, it's cast in stone. Nothing can change it. The worst disaster imaginable won't cause them to cut back on spending or shift things around. If a large meteor fell on Washington, Congress and the administration would go right on spending as planned from bunkers.

If they need additional money, they'll borrow it honestly by selling Treasury securities to investors. They will put it on your credit card. The total amount borrowed this way during fiscal 2002 was $213.9 billion.

The total amount stolen from entitlement surpluses during fiscal 2002 was $149.1 billion and the entitlement side of the national debt, listed under the deliberately deceptive title of "Intragovernmental Holdings," was $206.9 billion. The higher figure includes the interest paid entitlements against the previous year's balance.

What have we got so far?

The government admits to a $159 billion deficit and would like us to accept that figure. Yet, we know they borrowed $214 billion from investors and the annual interest they paid on last year's investor balance was the only budgeted expense (besides Social Security) deserving to be cast in stone. There's a $55 billion discrepancy.

We also know that the twenty entitlements usually producing a surplus came up with another $149 billion that went into the pirate's coffers. They will not count this because it was part of the budget. They estimated how much they would get from entitlements like Social Security in surplus when they made up the budget. Remember that their deficit thinking includes only the amount they chose to claim as "over" budget. If you planned to go to the bank for a loan next year, would you ignore it when you did?

This $149 billion is part of the real deficit. Add that to the $159 billion the pirates admit to and we've got a $308 billion deficit for fiscal 2002—still less than the $421 billion that the national debt went up.

The interest paid entitlements annually adds to the national debt, its part of the tab our children and grandchildren will be forced to pay off, but it doesn't involve any real cash. The Beltway Bandits pay this interest by simply handing the entitlements more bogus bonds. Therefore, they don't count it in their deficit and we won't either.

But two other things were happening in fiscal 2002. First of all, eleven of the twenty entitlements were drawing down on their "holdings." And secondly, there were shortfalls in personal and corporate income taxes due to the economy. Remember the sad reports after April 15, 2002?

As an example of the first factor, Social Security had produced a $98.7 billion surplus the year before, fiscal 2001. You can be certain that when they were deciding on the 2002 budget, the crafty pirates were predicting something close to that again, or better.

Even with high unemployment, fewer workers contributing, Social Security still managed a respectable $89 billion surplus in fiscal 2002, surpluses are not gone, but less than what the budget called for. Not altering the budget, the pirates probably borrowed the difference.

Also, as many experts have told us, when Social Security or any entitlement must draw down on its bogus trust fund holdings, the government will have the choice of either raising taxes or borrowing from investors.

We know they didn't raise taxes, but instead and much to the chagrin of the democrats, were cutting income taxes. With eleven of the smaller entitlements like Unemployment, Highways, and Airports, drawing down on their holdings you can be sure the pirates were borrowing from investors.

In short, the real deficit for fiscal 2002 was $421 billion, not the lower figure the crooks want us to accept.

Worse still, Mitch Daniels, the head of the President's Office of Management and Budgets (OMB) just came out with a prediction that the deficit for this year, fiscal 2003, is going to be well over $200 billion and maybe as much as $300 billion. So you can imagine how much the national debt, the real deficit, will go up this year.

Bush the younger is borrowing us into oblivion. We're heading for the moon, Alice.