In analyzing the Administration’s FY2011 budget, it is interesting to note some of the accounting gimmicks and tricks used to justify the mammoth overspending-caused Federal deficit. As the Committee for a Responsible Federal Budget has noted, of the sneakiest tricks was taking temporary policies that the President had signed into law, and assuming them as permanent, thereby implying that “if the policies were a part of the baseline, they wouldn’t need to be paid for when enacted.” So, in order to hide the true cost of the President’s fiscal vandalism, they are cooking the books by changing the baseline.
One example of this is the accounting behind the Earned Income Tax Credit, which the Administration is counting as ‘current policy’.
It is critical to note here that the Earned Income Tax Credit (EITC) is in part tax cut (which is commendable), and in part spending increase (which isn’t). As such, it is important to look at the fine print of the Budget Documents, and determine whether the EITC is, over all, spending, or a tax cut. It turns out 99.65% of President Obama’s proposed increase in the EITC over 10 years is spending, not tax cuts ($15.105b in spending out of a total of $15.158b).
As such, this is a clear example of the current Administration acting in what ought be considered accounting fraud to continue a big-spending program to increase the size and scope of government that they promised would only be temporary.
Fiscal accountability indeed.