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QUESTIONS AND ANSWERS ABOUT GOVERNMENT DEBT: BESTSELLING AUTHOR RESPONDS TO READERS' QUERIES

 /NOTE TO EDITORS: The following release is the second of three sidebars to CL004, Government Debt, Social Security Shake U.S. Fiscal Stability, moved earlier today./
 CLEVELAND, Nov. 11 /PRNewswire/ -- Since the publication of Bankruptcy 1995 in September 1992, thousands of worried readers began writing to author Harry E. Figgie, Jr., with their own questions about America's looming fiscal crisis. The questions asked most often, addressed in the four new chapters in the expanded paperback edition of the book, include the following:
 Q. How bad is the deficit right now?
 A. Unbelievably bad. The government is already spending nearly every dollar it collects in annual personal and corporate income taxes to fund federally mandated entitlement programs like Medicare, Medicaid, and so on. By 1995, entitlement spending and interest payments on our accumulated debt could consume all federal revenues from all sources -- every penny. And at that point, every other function of government -- from national defense to environmental protection, from medical research to park rangers' salaries -- could only be paid for with borrowed money.
 Q. Congress reported a 1992 deficit of $290 billion. Yet, you say the deficit was more than $400 billion that year. Which number is correct?
 A. One of my biggest complaints is that Washington not only refuses to take action on the deficit problem, it continually tries to mask its true size. Actual deficit spending for 1992, for example, reached $403.7 billion, as the Treasury Department's own numbers show. Why the disparity? The difference between the two numbers comes from the fact that the Treasury Department subtracts from the deficit the amount the government "borrows" from Social Security. It simply ignores the fact that the money pouring into the Social Security account is supposed to accumulate there in order to pay benefits to today's workers after they retire. More to the point, it's just a cheap trick the government uses to make its own profligacy appear less serious than it actually is.
 Q. What would happen to the deficit if the federal government kept its accounts the way corporations must keep theirs?
 A. If the U.S. government were a corporation or an individual and continued to grossly mismanage its finances year after year, it would be forced to declare bankruptcy. If the government were required to conform to the same accounting standards that it imposes on private corporations, it would have reported not a $290 billion defic ? year, but a deficit of more than $850 billion -- three times larger. Why the huge difference? The government does not require its own bookkeepers to take into account its future obligations, such as the money required to make pension payments to current and former civilian and military government workers, and to pay Social Security recipients. These so-called unfunded pension liabilities mount up every year. Corporations, on the other hand, must annually put aside money to cover future pension obligations, and they must show these obligations as expenses against income in the years they are incurred.
 Q. If we keep running deficits each year, that means the national debt is growing. But hasn't Congress put a ceiling on our national debt?
 A. A ceiling does exist, but it has never acted as a ceiling. We raise the debt ceiling to suit the whims of Congress. There have been 32 increases in 13 years. In fact, there have been two increases this year, and the most recent increase allows the debt to reach as high as $4.9 trillion -- so where's the ceiling?
 Q. Are there similarities between the economic chaos in Russia today and the debt and deficit crisis facing the United States?
 A. Though our economic systems are quite different, the end result of the former Soviet Union's deficit spending provides us with a good example of the pain created by fiscal irresponsibility. The speed with which the Soviet system disintegrated shows just how fast a world power can become a third-rate player in the global economic market. The new Russian government has so far continued to spend money it doesn't have by printing rubles at an outrageous rate. The predictable result of such rapid growth of the money supply is hyperinflation, which has crippled the country's economy and caused extreme hardship for all Russians, especially the poor. The same fate is virtually inevitable for us if we do not get our debt and deficits under control.
 Q. Do you think the President and Congress will solve our debt and deficit problem on their own?
 A. No -- so we have to force them to solve it, because, as history has shown us, they won't act on their own. I hope that every voter in the United States will keep the pressure on the President and Congress. It's not too much for people to write their elected officials every few months, to hold their feet to the proverbial fire. The letters needn't be long. They need only be direct and forceful, clearly conveying one simple and unmistakable message: Bring down the budget deficit and attack our national debt now!
 -0- 11/11/93
 /NOTE TO EDITORS: Free graphic to accompany this story is available immediately to any media with telephoto receiver or electronic darkroom (PC or Macintosh) that can accept overhead transmissions. To retrieve the graphic, call 214-416-3686.
 GRAPH TITLE: Actual versus Reported Deficits.
 CAPTION: The government routinely masks the true size of its annual deficits by "borrowing" money from Social Security and other trust funds. In 1992, for example, the reported "net" deficit was $290.2 billion. The "gross" deficit, however -- the actual difference between government receipts and outlays before trust fund monies are borrowed -- was $403.7 billion, or nearly 40 percent greater./
 /CONTACT: Cheryl Brady or Gary Wells of Dix & Eaton Incorporated, 216-241-0405, for Harry E. Figgie, Jr./


CO: Harry E. Figgie, Jr.; Bankruptcy 1995 ST: Ohio IN: PUB SU: PDT

AR -- CLFNS6 -- 3038 11/11/93 07:33 EST
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Date:Nov 11, 1993
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