,
11 tweets,
2 min read
Read on Twitter
This plan to sell off our public power systems manages to combine the worst of our national accounting process and Trump’s poor financial judgement. Thread: dcreport.org/2019/05/15/tru…
2/ First, this ain’t gonna happen. Trump’s budget is not a serious document and it is getting all the attention such a document deserves in the house. Separation of powers is alive and well post November-2018.
3/ But the idea that you can sell public assets to make money is a peculiar problem to DC accounting, and not unique to Trump.
4/ Our lack of a national balance sheet means that we don’t differentiate between investments and operating expenses. And that we don’t view public sales as asset write-downs.
5/ As a freshman coming from the business world, this is maddening. A $10 billion investment to save $5 billion in energy costs per year is “scored” the same way as a $10 billion fuel outlay. Both require us to identify $10 billion.
6/ If we had a national balance sheet we would view one of those as creating an asset and the other an expense. But we don’t have that sophistication so make lots of short term decisions in spite of having what should be the longest time horizon of any market actor.
7/ On the other side of the ledger, when we sell or privatize public assets, or sell drilling rights on public lands we view as a source of revenue rather than the loss of an asset, so have the same short termism. Thus Trump’s proposal.
8/ Weirdly, this gets framed as a partisan issue, with many pols who advocate for Trump-style approaches being framed as “fiscally responsible” for decisions that would flunk an intro to capital budgeting class.
9/ But it doesn’t have to be! There are other countries that require their version of the GAO to maintain a national balance sheet to inform their decisions. We could do this too!
10/ Trump, famously is said to not be able to read a balance sheet. And his own experience making accretive investments and accumulating asset value is nothing to be proud of.
11/ [And if you’re reading this and disagree Mr Trump, then send us all your tax returns so we can judge for ourselves whether the last 10 years of your career redeem your prior losses. Easy peasy!]
