Among the many things I know little about, one big one is accounting. But I do know there is a difference between expensing and amortizing a purchase or investment. There is also the question of balancing assets against liabilities.
Now that the budget hawks have reappeared, it is instructive to consider both. Take for example two big and venerable weapons systems: B-52 bombers and Nimitz class aircraft carriers. Both have two things in common: they cost a lot of money; and they last a long time. By comparison, the B-52s are much less expensive than their replacements, the B-1 and the B-2. But in their day they were considered expensive. And the CVNs (Nimitz class carriers), with a full complement of aircraft on board, are up around $10 billion or more.
From a budgeting standpoint, though, we "expense" both plane and ship, meaning we allocate their costs to the years in which they are or were being constructed. Both, however, have service lives of over a half-century! Those of you who know more than I about accounting, and that's just about everyone, should tell me whether it wouldn't make more sense to amortize their costs over their service lives. This isn't about a backdoor method of budget balancing. It's about common accounting practices.
Similarly, when looking at the nation's books shouldn't we balance our assets against our liabilities. The national debt is now over $13 trillion. On the other side of the ledger are $5 trillion in gold reserves and then trillions of dollars in federal lands, forests, minerals, wilderness, parks, and recreation areas, dams and water storage projects (almost all of these in the West), the value of our armed forces and defense equipment, federal buildings and facilities, and the list goes on. We don't know what all this is worth because no one knows how to conduct such a staggering appraisal.
But, the assets and liabilities balance is brought forward here not to escape the responsibility of wise stewardship of our national budgets and annual deficits. That is one of the most important jobs of our elected national officials. This issue, plus the idea of amortized accounting for long-term investments, is merely to try to put our national finances in a different, and hopefully more intelligent, context than they usually are when the deficit hawks start their periodic circling.
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