Want to feel rich? Think like the government

State of Maryland uses tricks and dodges not available to most citizens

December 20, 2010|By Marta H. Mossburg

Feeling pinched this Christmas season? Are your credit cards tapped from buying gifts? Are you underwater on your mortgage and wondering how you will be able to retire before 90?

The answer is simple: Use government accounting! It will have you feeling rich in no time.

Let's start with bills. If you do not have enough in your checking account to cover monthly expenses, take money from your children's savings accounts, their college savings fund and your retirement account — and run up your credit card bills, if you have any credit left on them. To replace those funds, send IOUs on nice stationery and pretend they are cash.

As a reminder, that is how Maryland balances the budget. It takes hundreds of millions from accounts dedicated to pay for roads and cleaning up the Chesapeake Bay, issues bonds, puts the cash in the general fund and bills future Marylanders for money spent years before they were born. Voila! Checkbook balanced.

Next, let's move to assets. Feeling house poor? Book the value of your home at what you paid for it and do not debit your mortgage and any home equity lines of credit you may hold. Forget that you can only consider selling your home for $100,000 less than you paid for it. You will see your underwater mortgage float above sea level immediately!

Treat your cars, clothes and gadgets the same way. Book them at what you paid for them and do not discount them by any pesky monthly payments. Assume you can sell them for what you paid for them or more.

That is the logic behind state and local government forays into real estate development. It usually costs taxpayers hundreds of millions, like the disaster known as Rocky Gap Lodge and Golf Resort, which had an operating deficit of $42.4 million as of June 2009 and has not been able to pay debt owed to bondholders and the state, according to the Department of Legislative Services. Since no one wants to build a slots casino at the luxury resort, taxpayers continue to finance its operations at a time when state workers must take furloughs because of budget deficits.

And then there is the convention center hotel in Baltimore City. The $300 million city-funded hotel lost $14.2 million in 2009 and is on track to lose $10 million this year. It was supposed to be making a $3 million to $7 million per year profit by this time.

As for investments, don't worry if your 401(k) is still down 20 percent since the 2008 market collapse. "Smooth" the losses over five years (or 10 for particularly bad years) and assume — as most state governments across the nation do with their pension funds — that you will always get an 8 percent return each year. That should allow you to lower the amount you save each year, use the money to buy more things you don't need, and go to sleep happy at night, sure in the brightness of your financial future just like former Baltimore City Mayor Sheila Dixon, who receives an $83,000 per year pension despite defrauding city taxpayers.

To make things even more rosy, promise yourself health care benefits and regular cost of living increases during your retirement and don't put any money away for them now. As the state government knows, they will magically appear when you decide to stop working.

Don't worry that all those bills will eventually come due. If the United States and Maryland can flourish under government accounting, so can you. They are not Greece or Ireland or some other far-away country that couldn't pay all of its workers. Besides, Americans are "exceptional," remember? And we have correspondingly high self-esteem to go with it, according to lots of studies.

Our governments will always be financially solvent, just as the country's strongest companies (like General Motors and Citibank) will always thrive. Maryland, especially, could never go under. Its inhabitants are the wealthiest people in the nation — all because of government.

Feel better yet? You are probably wondering why you did not try government accounting earlier. If only banks, credit card companies, retailers and other businesses adopted the same accounting practices, we could be back to full employment and total retirement security overnight.

Merry Christmas!

Marta H. Mossburg is a senior fellow at the Maryland Public Policy Institute and a fellow at the Franklin Center for Government and Public Integrity. Her column appears regularly in The Baltimore Sun. Her e-mail is martamossburg@gmail.com.

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