Sunday, January 26, 2003, Tim Russert produced the following chart on his NBC Meet The Press show. It was used to show disappearing surpluses in light of Mitch Daniels' latest announcement that next year's deficit could be more than $300 billion at the rate the government is spending now.

What we're dealing with here is a pure case of apples and oranges. The top two figures, fiscal 2000 and 2001, are from the Unified Budget, the negative figures are not. The last three years use an entirely separate way of accounting for surpluses and deficits and, of course, come to different results.

Bear with me. This will be clearer by example.

Back in the heydays of great surpluses everyone was so overjoyed and pleased with themselves that they never asked where the surplus came from. Those crooking the books knew, but why should they divulge it? Much of it was the theft of your Social Security money.

It's a rosy picture until you notice that the bulk of the surplus came from entitlements, not just Social Security but 18 other entitlements as well.

You should also note that entitlement money is counted here as an asset (what could be more of an asset than a surplus?) but is also counted as a dollar-for-dollar increase to the national debt, a very definite negative. The pirates record it both ways. It's like robbing a bank and then telling your wife you won the lotto.

It's also like the schoolyard bully who automatically comes over every morning to take your lunch money, and you automatically hand it to him. The practice has become so routine that most now believe it's preordained.

Then came fiscal 2001, the first year of the Bush presidency, where we got income tax cuts that amounted to less than $40 billion and at the tail end of the fiscal year we were hit by terrorists. With only about three weeks to go until the end of the fiscal year, September eleventh caused horrendous expenses.

No one mentioned any sort of deficit for fiscal 2001 did they? Yet, there it is big as life. Pay attention to where the red is located because from 2002 onward "on budget" is the only element considered.

Fiscal 2001 was the year when the government failed to notice that we were in recession for three quarters of the year. By their method of defining it, they missed two of these quarters of recession and apologized later.

Then came fiscal 2002 with all of its expenses for war in Afghanistan, chasing Osama bin Laden, corporate scandals with people losing investments and retirement savings, airport security, airlines going broke, Homeland Security, stock markets falling, and so forth.

Suddenly, we've got a deficit of $159 billion as the government defines a deficit, a national debt that goes up $421 billion, and we're no longer talking about "Unified Budgets."

Why not put things in terms of the unified budget again? Because it would look downright silly if they did. Here's what fiscal 2002 would look like under the Unified Budget:

I didn't change any of the elements. This table is put together exactly the same way as the two that preceded it. All I did was to plug in the new figures for the year. Can you imagine anyone saying that we had a nine and a half billion dollar deficit while the national debt increased $421 billion? Even for the government, that would stretch credibility.

There is still a surplus. The pirates are lying when they say surpluses are gone. Entitlement surpluses which were the bulk of the surplus in 2000, and accounted for the entire surplus in 2001, are still there. Even with high unemployment, fewer workers contributing payroll taxes, Social Security still managed a phenomenal $89 billion surplus.

Also, eleven of the eighteen smaller entitlements were drawing down on their bogus holdings which meant that the money was coming from the Treasury's general fund of current taxpayer dollars or money borrowed. Yet, the "other" entitlements still managed a $60 billion surplus for the Beltway Bandits to steal.

You will also notice the $159 billion deficit everyone is talking about today. It's in the same category as the $33.5 billion deficit was found last year. The latter being the deficit we didn't talk about because there was a $127 billion surplus.

Puzzled? You shouldn't be. When there is no surplus to brag about, the government turns to another form of accounting that defines a deficit as simply being "over budget." This is what Tim Russert's lower three deficits were about and radically different accounting than the first top two Unified Budget numbers.

At first, this "over budget" accounting seems simple enough. The pirates work hard to estimate how much revenue they can expect in any given year, then they argue back and forth on how they're going to spend it. Once they decide on a final number, anything they spend over and above that final number is a deficit.

This is pretty much the same as what we had in the Unified Budget tables above and in terms of the "on budget" category. What is listed above as "Income Tax" overcharges or shortfalls is meant to include corporate taxes, excise taxes, and so forth, everything except entitlement money.

But what about the entitlements, you say? That's the hooker, isn't it?

When the President and the Office of Management & Budgets, the House and Senate Budget Committees, Finance Committees, Appropriations, Tax, Ways & Means Committees, as well as the Congressional Budget Office (CBO) and the Government Accounting Office (GAO) are estimating revenues for the coming year, they are also including Social Security and the other 18 entitlement revenues expected.

For instance, the pirates estimate how much Social Security money will be coming in from payroll taxes. The also know how much must be paid out as a "mandatory" expense to the currently retired and disabled. But the surplus, the $89 billion in 2002, they throw right in with their "discretionary" spending and decide where to spend it as fast as it comes into the Treasury.

Because the entitlement money was included as part of the budget, it cannot be something that puts them "over budget." Isn't that convenient?

Both accounting methods are fraudulent. They are part of the reason Arthur Andersen, the government's outside auditor, will not sign off on the government books.

If you're not too confused by now, let's look at the national debt for fiscal 2002:

Obviously, the $214 billion the government borrowed from investors in order to make ends meet and bring the books to a zero balance by the end of the fiscal year is more than the $159 billion deficit claimed by the borrowholics. How can this be? And how do you account for the $54.9 billion difference?

We already know how entitlement surpluses of $149 billion were hidden, the pirates actually stealing that money and adding it to the national debt dollar-for-dollar under the pretense of borrowing. Remembering that 11 of the smaller entitlements have been drawing down on their phony markers, a very close difference of $57.9 billion is due to annual interest simply handed the trusts with no money involved, just more markers.

So why isn't the deficit, even defined as "over budget," at least the $214 billion that had to be borrowed from investors?

Here's a possible answer.

In calculating revenue from entitlement surpluses like Social Security, the pirates probably overestimated the surplus they could spend. After all, the Social Security surplus had been $94.5 billion in 2000 and $98.7 billion in 2001. They may have expected as much as $105 billion in fiscal 2002 and allocated its expenditure. They would then have suffered a $16 billion shortfall.

The same might have applied to the other 18 entitlements. Having received a surplus of $54.4 billion in 2000 and $62 billion in 2001, they might have assumed as much as $75 billion for fiscal 2002. This would have given them another $15 billion shortfall. We’re now up to about a $31 billion shortage that must be made up somehow.

Now, consider the fact that 11 of the smaller entitlements were drawing down on their phony trust funds. The money to cash-in these bogus bonds must come from the Treasury's general fund of current taxes or money borrowed. The total amount was needed was $46.6 billion with Unemployment leading the eleven at $23.3 billion.

And none of the borrowing to make up for this would be counted either. After all, it's just making up for what was in the original budget. Therefore, it doesn't put them "over budget." Do you now see how it works for them?

Two Questions

First, how can you trust a government that lies to you about money, particularly your retirement funds, to be honest about things like war and protecting the homeland?

Second, what happens when the greatest economy in the world, the home of the International Monetary Fund and World Banking, the leader of capitalism, is discovered to be fraudulent? Found to be running scams on its own people and, no doubt, trying to do the same to other nations?

Ever hear of rats leaving a sinking ship? It's worth starting wars just to distract everyone from discovery. Weapons of mass distraction work.