An analysis of the government's financial reports, with special reference to the deficit

A true system of governmental accounting must permit distinction between revenue receipts and non-revenue receipts, governmental cost payments and non-governmental cost ayments, gross debt and net debt, and proprietary funds and trust funds. Although the oancial reports of the United States do not exhibit all these features as clearly as might be desired, it is possible to make a true analysis and reconciliation from the officially re ported figures. Such an analysis for the fiscal year 1934 is presented in this article. Official reports generally exaggerate the annual deficit by treating statutory debt retirements as cost payments. On the other hand, the position of those who claim that the Treasury should treat its expenditures for financing the Reconstruction Finance Corporation and other "in vestments" and its outlays for public buildings and other structures as capital items, thus greatly reducing the annual deficits, is found to be untenable. Similarly erroncous is the attempt to reduce the net public debt by offsetting "assets," such as the intr-allied debts and investments in "subsidiary corporations" of the government.