Truth In Accounting Interview

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In this podcast, we’re interviewing experts who will break down the solutions to the world’s most pressing problems. And I promise you, if you listen to this podcast, you’ll not only stay informed but you will also feel more energy in your life. Welcome to Great.com Talks With.

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The topic of today is the American government is in huge steps, how much exactly and why does that matter? To understand more about this, we’ve invited Sheila Vineberg, the founder and CEO of Truth in Accounting. Truth in Accounting is an organization who educates American citizens on the truth about the American government’s finances. And Sheila has an expertise in governmental budgeting and accounting, which are tricky terms. We’re going to try to break this down to make it easier to understand. I want to say welcome, Sheila, to this interview.

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Oh, thank you for having me. Spirit.

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To help us understand what is the problem that we’re talking about today?

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Well, if you take this to a very high level at Truth in accounting, we really believe that citizens in the US and around the world do not have the financial information they need to be knowledgeable participants in our government, and that is harming our governments. People go to the voting booths, maybe assuming that their government’s finances are one way. For example, here in the US, we have state governments that say their budgets are balanced. So citizens go into the voting booths saying, oh, well, my government’s about budgets balance. We must be doing fine. So they vote for a certain candidate based upon that information. And then it turns out that, well, while they’re, quote, balancing their budget, they’re going into debt at the same time. And if a voter would have known that, what if they made a different decision than they originally made, just thinking the budget was balanced? So we think that this is creating cynicism, distrust in our government and is really harming our representative forms of government.

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There’s a lack of transparency in the actual numbers of deaths that the government has because that has not been kind of information that is not available for the individuals. Individuals take decisions which are health consequences, what the decisions are doing to help us understand more about those decisions that so much so that they you know, they the people you know, the government’s financial reports are voluminous, especially their budgets.

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And honestly, the truth is in accounting, we don’t we don’t usually dive into budgets that much because you just find yourself chasing your tail there very long. And they’re just they just are nonsensical on how they’re produced. So we usually work with our audited financial statements, but even those are very large.

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And then citizens have the they are told by their elected officials and government officials certain information. And because they can’t don’t either have the wherewithal or the lack of transparency, they really can’t counter the that information their elected officials are giving them and even reporters who are struggling with diving into these numbers.

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So voting on who you vote for, taxing policies, spending policies are being made based upon wrong numbers.

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How big is that gap from what is being showcased and what is actually the reality?

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Well, in the US federal government, they report and tell everybody that we have a twenty seven trillion dollar debt at this point in time, but that does not include the unfunded promises that have been made to our seniors, our veterans, our retirees.

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So taking it back to a personal level, if a person is currently either retired or planning their retirement, they have been promised by our elected officials that we’re going to give you retirement benefits, we’re going to give you Medicare medical benefits. And so they’re in their financial planning or thinking, OK, I don’t need to plan for those. But the government has not set aside enough money to fund all of these promises they’ve made. And there’s no plan right now to fund all of these promises. So in the future, people will be left with not having the services that they pay and benefits that they have been promised and counting on.

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I looked at the website, it’s quite clear the numbers, you have a ticker that you can look at that if you look at that ticker, it says the US has published a national deficit of twenty seven trillion. But the truth about the actual death is one hundred thirty seven trillion. So that’s five times higher, the actual amount. So that’s a big gap, I guess.

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And you have to think about it again, on a personal level. You know, if you thought you had twenty seven hundred dollars in credit card debt, you would plan a certain way and do your best to pay that off. But what if you really had one hundred and thirty three thousand dollars of credit card debt? That would. Those are two largely different numbers. And and again, people are voting based upon this. Twenty seven trillion dollars, not based on one hundred and thirty seven trillion dollars.

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Yeah, so that’s the problem, I just that the information is not correct for the people who are going to individuals who are making decisions based on that and help us to understand more how that affects the individuals, what affects them.

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And so people might be advocating for a certain tax or spending policy. They might say, hey, we need tax cuts or I want more in my program. Well, you really don’t know how much is being spent right now and how much debt you really have. So you don’t if you’re advocating additional spending. Well, should you really be advocating that because the government can’t cover the bills it currently has? Should people be advocating for more, more, more spending or should they adjust the promises that have already been made to allow for that more spending? And so people just don’t have the information they need to be knowledgeable participants.

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My inner child is asking, can’t I just print more money? Well, how does that work when the government owes a lot of money on me and on our website?

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I have to hate to be more of it, but to doomsday scenarios.

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And one of them is where this apparently seems to be where the US is heading, is to print more money.

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If you go ahead and print more money than people, again, who are currently saving and have certain money, are earning a certain amount of money, then this causes inflation. And so then their money becomes less valuable.

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And the more money you print, the less valuable your money becomes. And this is especially important for seniors to have a fixed income. So they only are making a certain amount of money.

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Every single person only has a certain amount of money available to start a year. Well, if you get into retirement and you know your groceries before and everything you could handle with, let’s say you had three thousand dollars a month fixed for your retirement income, but then if everything triples and quadruples in price because the government has printed money, then you’re not going to be able to your three thousand dollars isn’t going to be enough to to pay for your your needs when you retire.

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That’s a clear consequence that’s easy for them. I guess that’s what’s been happening in other countries, what the currency is. So you can get so many one dollar bills in other countries. And I guess that’s because they’ve inflated their money so high. That’s my question.

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Yeah, and then the other thing is, you know, if the other thing, the US, the US is doing both my doomsday scenarios at once and fortunately, they are printing money and they’re also borrowing money. So the borrowing money, more and more of the budget is taken. They borrow money. They have to pay people at least the interest on that. That borrowed money and the interest rate, I think it was almost nine hundred billion dollars the US paid in interest last year. Well, that’s more than a lot of the programs. You know, that’s more than the Education Department, the Environmental Department, a lot of departments. And so you can’t instead use money for expanding those programs, you’re having to use that on interest.

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Are we saying that the system is going to crash eventually? What’s going to be the consequence?

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I don’t see that the American electorate, the American citizens yet have. They just seem to be going along and kicking the can down the road. It doesn’t seem like they’re going, oh, well, this is a problem that we really need to solve this. They’re just like, oh, OK. We’ve always been able to go along. So we’ll be able to always go along and tell two thousand eight, I really didn’t have a good example of liking things. Well, I didn’t say, well they’re arguing everything will always go along, so everything will always be fine. That’s what they said here in the US housing market. They said prices will always go up, everything will be fine. And then overnight things crashed and we went into what we call the Great Recession here in the US.

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And I am nervous that something like that will happen in the US. I have spoken to two fellow accountants. Both of them were in countries that were in horrible financial shape, one in Venezuela, one was in an Eastern European country, and they went there to help consult with their people because they have this huge government debt.

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And they said, well, there were a few people like you, Sheila, who were trying to highlight it. But everybody else was like, well, we’ve always gotten by. Everything should be fine.

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And just like the housing market crisis overnight, the government’s finances just crashed and everything went bad. And that’s the thing that makes me nervous is it’s not good. It might not be a slow downturn, but eventually it may be just a freefall.

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It seems similar to what happened in Greece, the government had too much debt and then eventually crashed.

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Yeah, and here in the US we do have individual state governments and city governments where we are already seeing these financial stresses at the state and local governments, most governments. Forty nine of our 50 states have balanced budget requirements. The elected officials year after year say they meet those requirements. But we find that those governments have been going into debt at the state level. We’ve found that the states have accumulated one point four trillion dollars of debt and again, to bring it back to a personal level.

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And in Illinois, my home state, they’ve accumulated two hundred and twenty six billion dollars of debt, even though year after year they say we balanced our budget and that amounts to fifty two thousand dollars per taxpayer, that that number represents the amount of future taxes citizens are going to have to pay to cover all the debt the state has accumulated to date. And they’re going to pay those taxes and not receive any government services or benefits for those taxes.

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So I guess that’s where truth and accounting you’re going to see so some kind of fits into the picture you have, I understood correctly that you do these kinds of research. So you, uh, look at the numbers and see if this is really correct. And you have released some reports that it’s kind of correcting those numbers.

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Yes. On an annual basis, we released the Financial State of the Union, which is the federal government’s financial state, highlighting its true financial condition. And we also read at least the financial state of the states and the financial state of the cities. And those reports, again, highlight the debt that elected officials are accumulating, all while saying their budgets are balanced.

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And again, to take it to a personal level, it would be kind of like your spirit. And so you have a partner. You’ve both agreed to live within your means. You’re not going to overspend. So you’re very cautious with your cash, how much you spend and you think everything for four months and euros are going along fine. And all of a sudden you find a credit card statement for hundreds of thousands of dollars and you go to your partner and you’re like, whoa, whoa, whoa, whoa, whoa. What happened here? I thought we were living within our means.

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And they’re like, well, we went ahead and I didn’t spend more cash than we had. I just I just when I didn’t have enough cash, I just happened. Then I put it on the credit card and then you’re stuck with this debt and that’s what’s going on.

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The elected officials here in the US and around the world are putting money on this hidden credit card that citizens are going to be liable for paying for in the future.

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It’s very clear from the reports I looked at, one of the reports, the Financial State of the Union 2020, it’s just two pages, quite clear the images. So you make it quite easy for someone who does understand this to understand them. You also have something where you can look at each state and see how much each citizen is in depth because and if you break it down to citizen per citizen.

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So there’s differences on the map as well. That’s interesting, I guess.

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Yeah, that’s on our sister website. We have our home website, which is Truth and accounting dog. And then we have a sister website called Data Hyphen XG and the data hyphen XG. As you said, you can go to your individual state, click on that state and get the easy to understand two page document that tells you exactly each taxpayer is what we call taxpayer burden, how much the taxpayer is going to be burdened with paying in the future. We do have 11 states that were ahead of the game before the pandemic struck, so they were in fine financial shape at that time. And then you can also do the same for data and the dog. You can do the same for our seventy five most populated US cities. You can go and get a two page document there. And then as everybody is under quarantine, we find people have fun. They have the time to go to ah create your own chart feature on that website where you can go in and you can get the historical trend for your individual state on different data series. But you can also compare states. So if you want to compare Illinois House, Illinois doing compared to Indiana, or maybe I’m thinking of moving to Texas. So how is it doing compared to Texas? And we have seven hundred data series in there where you can create charts to compare states and city governments to each other.

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Maybe that would create engagement where people can actually see their own city. Well, how’s it going for my city? I would like to know that.

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Yeah. Yeah. And we’re trying to get where we’re right now, we work with the in the US, we have accounting standards boards.

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So the federal government here has its own accounting standards board. Corporations have what is FAFSA, which people may know of the Financial Accounting Standards Board. And then we have the Governmental Accounting Standards Board. And we’re always trying to work with those accounting standards boards to require state and local governments and the federal government to be more transparent about their numbers. We did have success at the state and local level where previously and the reason we started the financial state of the states and the financial state of the cities is because state governments and city governments were not required. In fact, they were required to not put their pension credit card debt on their statements and their retiree health care credit card debt on their statements. So we worked with them and others for years to change that rule and we fortunately got that rule. So the governments are being more transparent in that area.

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You’re saying that’s another thing that you’re also doing at the same time, you’re working with actual governments to change some of the rules that are blocking transparency?

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Yeah, and right now, the government’s budget, the state and local governments budget based, they segregate the budget and the biggest segregation and the biggest fund they segregated into funds and the largest fund that the government’s budget here in the US is the general fund and other budgeted funds. And unfortunately, those funds, when you do fund accounting, those do not include your pension and retiree health care debt. And this is critical because the people who do the budgeting and the citizens look at this general fund and they will see that it has a surplus. But again, it’s because their bank account has a surplus. They’re not looking at their credit card debt.

So, again, they’re making these huge decisions on how to budget the general fund and other budgeted funds based upon the wrong numbers. So right now, our big push right now is to get the governments to be required to have to report the general fund as boring accountants call accrual accounting full accrual accounting. So they would have to put this credit card debt and they couldn’t pretend that they have a surplus in their general fund when they have all this debt at the same time.

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She would like to ask you, what would you want people to do after hearing this interview?

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Well, obviously, go to our website. So truth and accounting dog, go to and data hyphen Zig-Zag at the bottom of our Truth and Accounting Dog website. You can sign up for our morning call. This comes on a daily basis from our research director, Bill Bergman. He does that fancy aggregating, I think that’s what they call it in accounting computer terms. He aggregates the best federal, state and local government accounting for accounting and budgeting stories. And he puts them in one email. And we also use that as a vehicle to say, hey, our financial state, for example, our financial state of the cities will come out and January twenty sixth and we will announce that in this phone call. So people should go in and sign up for that.

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And then also we are a nonprofit. We’re like all nonprofits. We’re always looking for money. So we can as you mentioned, we have a lot of work going on and we’re always looking for additional resources to be able to to accomplish that work, if not more work.

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Help us understand.

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Is there anything extra important here that you really would like for more people to understand as a way to end this into the we have not maybe talked about or that you want to empathize here will be w that would be that they unfortunately, that governments are an elected officials and other government officials are unfortunately not as transparent as they should be.

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If your governments say that they’re doing fine questioning. So to say, well, yeah, you may be doing fine, but, you know, how much debt do you have? Because a lot of times to them, a surplus is just they have extra cash right in hand. And so they will mention that they have this surplus cash, but they won’t mention all the debt that they have. So if you’ll just be leery of your government’s claims that their budgets are bills, we’re running a surplus. Everything is fine, really. Question them on that. And obviously, you can go to our website and find out more information about their specific government’s financial condition.

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If the American government was a schoolkid and you were the teacher, what grade would you give the American government as a school kid in accounting and financial control?

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Well, I would give all of our financial State of the Union and each one of our financial and the financial state of the state and the financial state, the cities. We do give a letter grade to the governments. So the federal government here in the US gets, say, for its financial position, gets an F, as do many states here in any city, no city gets an F. So we do have some aid. So there are some you know, and one of our A’s, I find it a very interesting story is one of our A’s was Utah. We actually gave them the truth in the accounting award one year. And I was able to talk to their budget director. And I said, you know, I always get asked, you know what other governments are doing? Right. And you can tell me. And she said facetiously, well, we have a tendency here to only promise the services and benefits that we can afford. So that’s what keeps us in good standing.

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So could you see those different grades as well on a map?

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Is that visible on the website that I know that is not available on the website, but they can go to their individual state and get that, or they can go to the data set and create a chart just on that grade.

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And it will create a chart that has each and every state’s a grade or each and every state cities grade.

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Let’s have some fun ways to understand finance to break it down like a school class. So easy to read.

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Yeah. And you can go in and play with that and get your state’s GDP population. We did find that. I hope I don’t

insult too many attorneys, but we did find that the more we have a data point of the number of attorneys you have in a state, and we do find that the more attorneys you have in the state, the worst financial shape you’re in.

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It’s one of the points in my much for taking time to clarify some, I guess, important information that citizens need to have when they’re making how much trust we should. Put into the government’s hands that they’re going to take care of our financial situation. I guess that is the main problem here, that there’s not enough transparency. So thank you for clarifying that.

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Yeah. And, you know, I would just say, you know. Since there is that lack of transparency, you really don’t know what you’re going to get from the government, probably personal financial planning is important because, you know, I would almost count. That is I would but I would personally do is plan for myself without thinking that the government’s going to give me anything. And then if the government does happen to have resources available, then that would be additional resources. Not not not not the resources I need. That would be additional resources.

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