Government the champ at cooking books

WASHINGTON -- Lost in all the outrage over the corporate accounting scandals is one fact politicians do not like to acknowledge: The auditing problems at American companies cannot rival the bookkeeping shambles of the world's largest enterprise -- the U.S. government.

Exaggerated earnings, disguised liabilities, off-budget shenanigans -- they are all there in the government's ledgers on a scale even the biggest companies could not dream of matching.

WorldCom Inc. executives brought America's second-largest long-distance phone company to the brink of bankruptcy after using improper accounting to pad earnings by $3.8 billion.

Last year, when Congress was faced with a similar need to bolster the bottom line, lawmakers simply voted to shift the date by which corporations had to make a quarterly tax payment. The result: $33 billion in revenue needed to cover President Bush's tax cut.

Sleight of hand

While Republicans pushed that particular budget sleight of hand, both parties over the years have engaged in similar maneuvers to cover shortfalls.

"If you look at the books of the corporate world, even the fraudulent ones, they are less subject to manipulation than the federal budget is," said former Minnesota Rep. Bill Frenzel.

"Members of Congress get re-elected by bringing home roads and armories and university grants and heaven knows what else," Frenzel said. "Every American wants more frugality, but only after they get their road or bridge."

With such a dynamic, it is no wonder that there has been no outcry over government accounting scandals to match the congressional outrage being expressed over misleading financial reports by U.S. companies.

On Friday, Bush's Office of Management and Budget offered its own restatement of earnings and expenses. The federal deficit for the current budget year, which ends in September, is now projected to be $165 billion, not the $106 billion deficit the administration projected in February.

Projected surplus cut

The White House also once again cut the projected surplus for the next decade, to $827 billion. That is a far cry from the $5 trillion surplus projection Bush made when he took office.

A 2001 report featured $17.3 billion in what was described as "unreconciled transactions" -- money that simply could not be accounted for.

GAO comptroller general David Walter said this discrepancy does not mean the money was stolen, just that the antiquated accounting systems in use at many government agencies lost track of it.

The GAO has published a list detailing the auditing sins of various agencies. They range from estimates of hundreds of billions of dollars unaccounted for at the Defense Department to $12.1 billion in improper Medicare payments last year.