Alan Sloan about the real picture of the deficit

I was at a doctor's office last week and found Forbes from Sept. 12. There was a frightening report by Alan Sloan, in anticipation of the cheers from the administration about the reduction in the deficit, that all this was nothing but smoke and mirror.

Unfortunately I cannot access the archives of Forbes, but if anyone can find and post it - this is really important.

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.

The stated deficit, you see, measures how much less cash Uncle Sam takes in than he spends. That's fine for gauging the deficit's impact on the economy, which is what budget experts generally do. But if you're trying to assess Uncle Sam's overall fiscal condition, as I am, you should count those IOUs in the deficit because they have to be paid someday.

:-)