Whistle a Happpy Tune

Don't fall for all the happy talk coming later this month...

(Fortune Magazine) -- There will be lots of celebrating in Washington next month when the Treasury announces that the federal budget deficit for fiscal 2007, which ends September 30, will have dropped to a mere $158 billion, give or take a few bucks.

That will be $90 billion below the reported 2006 deficit and will be toasted by the White House and Treasury as a great accomplishment.

[snip]

We'll start with Social Security, which will take in about $78 billion more in payroll and income taxes than it shells out. The Treasury takes that cash, gives the trust fund IOUs for it, and spends it. That $78 billion isn't in the stated deficit.

Wait, there's more. The Treasury will fork over $108 billion of interest on the trust fund's $2.2 trillion of Treasurys - but will give the trust fund IOUs, not cash. They won't count in the deficit either. Add that $186 billion to the stated budget deficit, and it more than doubles, to $344 billion.

[snip]

Now, let's move on. We end up with a total deficit of more than $400 billion by undoing another piece of WAAP ledger-demain: the $97 billion increase in Treasury securities held by "other government accounts," such as federal employee pension funds.

You can see the details if you want at the web link above.