July 12, 2010

Budget Gimmicks or the Destructive Art of Creative Accounting

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There are many budget gimmicks that U.S. government officials use to hide the size of deficits, debts, program costs, and revenue losses. Some strategies include pretending spending does not exist, pretending spending is smaller than it is, pretending spending is really an investment, pretending tax revenues will be bigger than should reasonably be expected, and pretending future pension liabilities do not exist. Given the many spending limits in place that elected officials nonetheless manage to avoid, this paper concludes that few methods will successfully cap spending short of shrinking the size of government.