With the bankruptcy filing over the weekend of the globe's second-largest long-distance telephone company, WorldCom, Americans received another signal that all is not well in corporate management.
WorldCom already had disclosed that it inflated its profit by $3.8 billion through deceptive accounting. Result? The largest bankruptcy in U.S. history.
Taken by itself, the WorldCom situation would be enough to chill the stock market and the financial world in general. But coupled with all the other instances of corporate shenanigans in recent months, the cumulative impact is devastating.
Economists and analysts are pointing to the undermining of confidence as a major contributor to the stock-market malaise that has seen the Dow Jones industrial average, a bellwether of Wall Street's performance, sink to four-year lows.
There is another huge entity that regularly cooks its books but rarely gets called into account: The U.S. government.
While the federal government maintains the military, oversees international trade and strikes treaties with foreign governments, it also spends an enormous amount of money on the pet projects of all 535 senators and representatives. It is this spending frenzy that, year after year, pushes the demand for federal dollars higher and higher regardless of the overall economy's effect on revenue.
Because these spending projects are priority No. 1 for our elected officials, there are few -- if any -- serious concerns raised about where all the money is going.
There are other accounting shortfalls in Washington as well.
A 2001 report listed $17.3 billion of "unreconciled transactions." In plain English, this means money that could not be accounted for. Not that anyone in government thinks it was stolen. But the government's accounting systems weren't able to pin down where the money went.
In addition, there are hundreds of millions of dollars unaccounted for in the Defense Department.
And the General Accounting Office has identified $12.1 billion in improper Medicare payments last year.
Another area of questionable accounting is how payments for Social Security and Medicare -- deducted from every worker's paycheck -- are handled. Government officials would like for Americans to think these deductions are safely put away in plainly labeled accounts to be used for Social Security checks to the nation's retirees and for Medicare reimbursements to health-care providers.
But the money is used to shore up the rest of the federal government's spending needs.
As a result of all of this, the Office of Management and Budget has revised its deficit estimate for the current fiscal year to $165 billion from $106 billion. And the Bush administration has revised its estimate of the projected surplus over the next decade to $827 billion from $5 trillion.
Keep in mind that many Americans are looking to Congress and to the White House for stern action on corporate fraud.
But who will oversee the accounting problems of our federal government?