"Outlays of off-budget Federal entities are excluded by law from budget totals."

(Commentary posted by Roger Erickson)

The following, extended discussion should drive home Robert Eisner's 1993 point that "Everyone talks about the federal debt, but few, literally, know what they are talking about."

Warren Mosler made an interesting observation, one that triggered questions about all our current confusion.

"So I see the reports of C and I loans going up about $20 billion but nothing on commercial paper dropping about $30 billion? I still don’t see the domestic credit driven ‘borrowing to spend’ stepping up to replace the proactive govt cuts."

Since finance is NOT my field, I'm trying to follow this. Please tell me if the following is on-track.

Corporate profits remain at record highs, and - anticipating a bottom - they're building space & inventory? Yet ongoing cash transactions (sales/salaries?) are NOT growing, so corporations are NOT factoring as much in this environment, of course. Does that still leave gross uncertainty? Yes. None of that says much about - with certainty - the state of Jane and Joe Sixpack, who are largely locked outside the current economic metrics used to assess and craft policy. The usual uncertainty abounds.

Soooo .... unless Congress is a whole lot smarter than we are, we have a problem with our net, policy assessment process? Recent events surely indicate that that's a true statement? :(

What's the worst that could be happening? Maybe most of the former Middle Class is sinking into a welfare class, increasingly living only on subsistence "Transfer Payments" that are officially considered as "off" the Treasury budget? This last issue is critical. Is the mis-match between Treasury-reported inflows/outflows of national fiat indicators solely due to lagging data, or because many transfer payments, especially SocialSecurity and Medicare, are considered off-budget?

If the above all true, then we have a looming glitch!

If we cut SS & Medicare at all, the real impact and aftermath will be far larger than the perceived, expected (and promised, "fiat") benefits from reducing our ongoing, purely fiat "deficit" and "debt." Sure, that might be the nail in the coffin for the GOP as we know it, but it also might be too late for the US Middle Class.

Who says knowing operational details isn't important?

Our current, Marie Antoinette economics may be producing a "Let them eat Transfer Payments" economy? Everyone will have bad (fast) food, iphones, cable tv & live in a ghetto ... with no motivation, poor education, no jobs & shrinking future prospects?

What could go wrong?

To follow all this, now I just want to know how many Transfer Payments are officially considered on-budget vs "Off-Budget", and how many people - including economists & policy staff - know those simple, operating details?

Is this important? It certainly could be. "Transfer receipts accounted for almost 15 percent of total personal income at the national level in 2007." How fast is that growing? Anyone know?

Does the avg economist know how much of this is on or off-budget? Take this summary as a random example. No mention of what's on-budget vs off-budget.

This orthodox expectation that all Transfer Payments are ON-BUDGET seems to be nearly universal?

What if some real portions of our nation's collective fiat are NOT officially ON-BUDGET?

That would throw a wrench in a lot of calculations about the dire consequences of our deficit in fiat?

So what is/isn't on-budget?

Here's the killer statement

"Outlays of off-budget Federal entities are excluded by law from budget totals. However, they are shown separately and combined with the on-budget outlays to display total Federal outlays."

Search for the last entry of "off-budget" in the document at that link.

This rings a bell. I'm now thinking that this dichotomy goes all the way back to Hoover"s & FDR'S shared view on "ordinary" and "extraordinary" budgets, and their emergency conclusions that one should be balanced, that the other allowed to float.

Subsequently, was that the key, politically expedient reason for moving more Automatic Stabilizer expenditures "Off-Fiat-Budget" over the decades since? Is that basically how an electorate now allows it's policymakers to invest it's dynamic fiat (aka, public initiative) in it's offspring, instead of getting paralyzed by static-asset budgets?

Where does that leave our politics? Now it's only a question of which fiat figures, net, on-budget or off-budget, various audience members are using as they argue .... instead of coordinate?

You really couldn't make this up. Policy staff at the highest levels of our policy apparatus aren't even defining the terms of the operations they are arguing over! Same for orthodox economists.

If they'd simply define their terms, they'd finally see through the fiat fog, and then perhaps, along the way, their entirely fiat argument would evaporate. Maybe THEN our electorate might go on to exploring our other, REAL options? Faster/bigger/better?