Accounting Expert: Here’s What Biden Won’t Say on US Deficits in State of the Union Speech

Fences and barriers surround the U.S. Capitol after being re-installed ahead of President Joe Biden's State of the Union Address before a Joint Session of Congress on Feb. 27, 2022, in Washington, D.C. The State of the Union is scheduled for March 1. Pete Marovich/Getty Images

President Joe Biden is expected to speak an hour or more while mentioning multiple hot issues during his State of the Union (SOTU) address to the nation Tuesday evening, but the true scope of the national debt likely won’t be among them, according to a government accounting guru.

The Department of the Treasury issued its latest annual Report on the Financial Condition of the United States on Feb. 17 and estimated the national debt to be $29.8 trillion as of Sept. 30, 2021, the last day of the 2021 fiscal year.

In the five months since the end of the 2021 fiscal year, calculations by private national debt clocks maintained by groups like Truth-in-Accounting (TIA), a Chicago-based non-profit devoted to advocating for transparency in government, indicate the national debt total now exceeds $30 trillion.

But the truth is, according to Sheila Weinberg, TIA’s founder and chief executive officer, the true national debt is, at $141 trillion, more than four times as big as the official estimate because federal accounting procedures don’t include projected future costs to taxpayers of huge entitlement benefit programs like Social Security, Medicare, veterans benefits and federal retiree benefits.

“It was great to see the Treasury Department issue the federal government’s audited financial report before the State of the Union. But I am concerned that the president will not mention the important information included in it,” Weinberg told The Epoch Times on Monday.

“A critical part of the State of the Union should be the financial state of the Union, but the president will most likely fail to mention that the government’s spending is on an unsustainable path and that, while the government has promised our seniors Social Security and Medicare benefits over the next 75 years, Congress and the president have no idea where the money will come from to pay $71 trillion of those benefits,” she continued.

Weinberg also said she doubts “the president will mention that in order to maintain the spending projected without borrowing even more money, taxes would need to increase by more than 32 percent or spending, including promised Social Security and Medicare benefits, would have to be cut by 25 percent.”

Private employers are required to project on an annual basis their future liabilities for things like employee health and retirement programs and to set aside funding for them. The federal government does not require its accountants to do so because of the power to raise tax rates and manipulate tax policies to generate more revenue.

A Peterson Foundation billboard displaying the national debt is pictured on K Street in downtown Washington on Feb. 8, 2022. Jemal Countess/Getty Images for Peter G. Peterson Foundation

The Chicago-based TIA leader added that “while the president might mention the need for additional defense spending, the GAO who audits the federal financial report indicates that ’material weaknesses’ exist that make it impossible for the auditors to account for the current spending.”

Weinberg was referring to the lengthy statement and analysis by the Government Accounting Office (GAO), the investigative arm of Congress, which Biden is also unlikely to mention in his SOTU remarks even though it is included in the Treasury’s annual report,

The GAO’s auditors dig deeply into the financial statements provided by executive branch departments and agencies in order to reach conclusions about the reliability of the statements, or the lack thereof.

While couched in dry accounting and financial terms, the GAO analysis paints a damning picture of a government that cannot credibly account for its spending, assets and liabilities, as seen in these observations by GAO: “The federal government is not able to demonstrate the reliability of significant portions of the accompanying accrual-based consolidated financial statements as of and for the fiscal years ended Sept. 30, 2021, and 2020, principally because of limitations related to certain material weaknesses in internal control over financial reporting and other limitations affecting the reliability of these financial statements and the scope of our work ...

“As a result of these limitations, readers are cautioned that amounts reported in the accrual-based consolidated financial statements and related notes may not be reliable. The federal government did not maintain adequate systems or have sufficient appropriate evidence to support certain material information reported in the accompanying accrual-based consolidated financial statements.”

The reasons the weaknesses “have existed for years,” according to GAO, include the federal government’s chronic inability to estimate accurately Small Business Administration (SBA) loan guarantee costs, reasonably calculate or document environmental liabilities, provide documentation for large portions of the operational costs of the Department of Defense (DOD) and SBA, or adequately account for intra-governmental transfers.

In other words, according to GAO, federal officials cannot “reasonably assure that the consolidated financial statements are (1) consistent with the underlying audited entities’ financial statements, (2) properly balanced, and (3) in accordance with U.S. generally accepted accounting principles.”

The GAO analysis, Weinberg said, “is giving them what we accountants call a ‘disclaimer opinion.’ What that means in essence is they flunked their audit.”