November 25, 2013
Open Letter to:
Tom Coburn U.S. Senator (R) Oklahoma
David A. Vaudt Chairman Government Accounting Standards Board
Scott Burns Newspaper Columnist-Dallas Morning News
Will Deener Newspaper Columnist-Dallas Morning News
Jim Cramer Television Personality-CNBC
David Faber Television Personality-CNBC
Joe Kernen Television Personality-CNBC
Larry Kudlow Television Personality-CNBC
Steve Liesman Television Personality-CNBC
Rick Santelli Television Personality-CNBC
Andrew Ross Sorkin Television Personality-CNBC
Neil Cavuto Televison Personality-FOX Business
Lou Dobbs Television Personality-FOX Business
Rush Limbaugh Radio Personality
Doug Casey Economic Newsletter-CaseyResearch.com
George Friedman Global Intelligence Newsletter-Stratfor.com
John Mauldin Financial Newsletter-MauldinEconomics.com
John Williams Financial Newsletter-ShadowStats.com
Robert Shiller Nobel Prize Winning Economist
Paul Krugman Nobel Prize Winning Economist
Jeremy Siegel Economics Professor-Wharton
Why doesn't the Federal Government use GAAP Accounting? (generally accepted accounting principles)
By the continued use of Cash Accounting after the "Unified Budget" was adopted during the Johnson administration in fiscal year 1969, the Federal Government has been dramatically understating the Government's deficit spending and as a result is dramatically understating our "real" financial obligations. We are reporting cash-based deficits in the $1 Trillion range when our "real deficit" (GAAP-basis) is on the order of $4-6 Trillion! By using Cash accounting we are able to report a Federal Debt of $17 Trillion when our "real obligations" (Federal Debt plus present value of Unfunded Liabilities) are on the order of $75-85 Trillion!
The U.S. citizenry, the world, and especially Congress need to get a true understanding of our financial condition rather than the watered down representation that is currently being reported by what I consider to be an inappropriate accounting methodology.
As a result of our overspending on a cash-basis AND our understating of our true deficit by not using GAAP accounting we have created a massive Ponzi scheme (USAPonzi) that has inflated both our reported GDP and our asset prices for the last 45 years. This GAAP-basis Deficit spending has also allowed America and Americans to "live beyond our means" for the last 45 years but in doing so has created a financial obligation to the Federal Government for each U.S. citiizen (every man, woman, and child) of more than $230,000!!!
I realize that Senator Coburn fully understands this problem and is actively working to mitigate the impact of what he calls the "debt bomb" that is coming as a result of the out of control financial commitments that have been made by both the public and private sectors of our economy.
I also understand that the GASB (Government Accounting Standards Board) www.gasb.org has developed "government GAAP" standards for state and local government to improve the quality of financial reporting at least in part to better reflect the impact of future obligations on the budgets for these state and local goverments. I contend that the Federal Government should be following these same standards.
I have created a website (www.usaponzi.com) that analyzes this Ponzi scheme and projects what impact the implosion of USAPonzi might have on the U.S. and World economy.
John W. White Plano, TX