- The Washington Times - Tuesday, July 9, 2002

Congress this week is cracking down on corporate financial practices, but government watchdog groups are attacking its credibility, accusing lawmakers of ignoring budget deadlines and engaging in equally dubious accounting tricks.

The Budget Enforcement Act of 1974 requires Congress to approve a budget resolution that sets limits for how much the government can spend. Congress routinely disregards the April 15 deadline, but this year lawmakers have all but given up on adopting a budget.

Senate Majority Leader Tom Daschle "can't even be bothered to pass a budget this year," said Eric Schlecht, top congressional analyst for the National Taxpayers Union.

The House approved a $2.1 trillion budget March 20, but Senate Democrats cannot agree on a spending plan and show no sign of bringing a budget to the floor. Mr. Daschle, South Dakota Democrat, has been at the forefront of pushing legislation to hold corporations more accountable for financial misconduct.

Even when Congress does approve a budget on time, however, lawmakers often disregard it. Government watchdogs say this and other breaches of congressional budget rules damage lawmakers' credibility in calling for greater corporate accountability.

Tom Schatz, president of Citizens Against Government Waste, said that over the past five years Congress has spent a total of $142 billion beyond the amounts it had budgeted.

"That's more than 12 times the misstated figures from Enron, Xerox and WorldCom combined," Mr. Schatz said.

The government's financial books are in such poor shape that officials cannot account for $17.3 billion of taxpayers' money from fiscal year 2001. Rep. Walter B. Jones Jr., North Carolina Republican, recently wrote to Treasury Secretary Paul H. O'Neill to demand an explanation of what the government calls "unreconciled transactions."

"I think we have a responsibility and an obligation to the taxpayers of this country to explain to them how we lost $17 billion," Mr. Jones said.

Mr. Schlecht also noted that lawmakers frequently devise accounting gimmicks, such as "forward funding," in which Congress spends money in the current fiscal year but counts it against the total of the following fiscal year to circumvent budget caps. And when the new fiscal year dawns, lawmakers often shift the extra money on the books back to the previous year.

"So when you spend it this year, we're going to count it next year, and then when next year rolls around, we're going to count it as last year," Mr. Schlecht said. "They cooked the books more than Arthur Andersen could ever dream of."

Said Trent Duffy, spokesman for the White House Office on Management and Budget, "There's certainly creative accounting in Washington."

All of this is legal because Congress makes the rules. The same situation applies to "supplemental" or emergency spending bills, which cost taxpayers tens of billions of dollars annually but do not count against budget limits.

"They're off on some metaphysical plane that doesn't apply, like we're spending pretend money," Mr. Schlecht said. "We'll just take all the money we've spent on farming and put it off the books now, so it doesn't count. I don't see how that's fundamentally different from what WorldCom supposedly did."

The White House also has proposed "full-cost accounting," which would require Congress to include pension costs in the true accounting of a program. Mr. Duffy said it would add about $9 billion annually in costs that currently are not recognized in the budget.

"Congress so far has not been warm to that proposal," Mr. Duffy said.

Then there are the exemptions that lawmakers grant themselves. Unlike some corporate executives, members of Congress are not required to declare the cost of their prime parking spaces on Capitol Hill as taxable income.

House lawmakers, unlike CEOs, can apply frequent-flier miles accrued on official business for their personal use without declaring the benefit as income. Corporate executives, senators and White House officials must declare the airline miles as income for tax purposes.


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