Our Government: A Business Without Assets? postscript

National liabilities are the other side of national assets. In my last post, I didn’t discuss this side of things. Governments not only don’t track their own assets; apparently they don’t track their own liabilities either.

Sovereign debt crises are now happening in the “PIIGS” countries (Portugal, Italy, Ireland, Greece and Spain) because of “off-balance-sheet” liabilities. These liabilities includes things like sovereign credit default swaps (CDSs) and securitized investments via banks, as well as private equity deals.

More telling, national off-balance-sheet liabilities also include health and retirement benefits such as our Medicare and Social Security programs. This doesn’t mean those things are intrinsically bad. It just means that someone needs to show the assets that could offset them on the national balance sheet.

And that won’t be taxes. Taxes are just a part of our national government’s assets. Federal taxes will go toward paying only two-thirds of our national government’s projected budget debits in 2011.

Likewise, using our definition of assets as things which bring money into our pockets and liabilities as things that take money out of our pockets, we can see that jobs are liabilities, not assets. It doesn’t matter if those jobs are private or public or how big the numbers of jobs are. What does matter is what kinds of assets for America workers in those jobs produce.

On the other hand, infrastructure improvements are national assets. But while government bureaucrats and Congress point fingers at each other for the failure to make such improvements, the stimulus package has spent very little on infrastructure. The infrastructure our government has spent the most on shoring up is our continuously-eroding banking infrastructure.

So yet again, we’re right back to the key question asked in my original post, Our Government: A Business Without Assets? With Moody’s threatening to lower the United States’ current three-star sovereign credit rating, why aren’t our President and Congress including national assets and liabilities in the discussion about our national deficit and debt?

Copyright © 2010 Nancy K. Humphreys


#1 Our Government: A Business Without Assets? two notes | Brucenomics on 03.20.10 at 12:39 pm

[…] Our Government: A Business Without Assets? postscript I discussed sovereign debt crises due to off-the-balance-sheet debts of governments in the PIIGS […]

#2 Good Debt - Word of The Day #16 | Brucenomics on 06.27.11 at 11:38 am

[…] an example of good sovereign debt. A country borrows from other countries at an interest rate of X%. The country uses that money to […]

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