Peggy Noonan wrote a great article in the Saturday WSJ about the Tea Party movement and the unease many American feel about the “ruling elite.” Revolt of the Accountants
It made me think of a bigger issue that doesn’t get much play. The accounting rules for future obligations allow governments and corporations to make promises about the future without having to accrue real money to pay for them. This started with Social Security and evolved into defined benefit pensions and Medicare. Now the bill is coming due. And we can blame the politicians, the corporate bigwigs and the greedy unions but they were all enabled by the accommodating accountants.
When GM gave generous employee retirement benefits in the 1970’s they were not obligated to fund them properly or to take enough of a charge to current earnings. They overstated profits and over-rewarded shareholders in the 1970’s then and became a ward of the state when the bill came due.
Unfortunately it is still happening somewhat at big companies and massively in government. In my opinion the accountants have let the taxpayers down.