Liars and Cheaters in Washington
"The Emperor's New Clothes"
Jun 2, 2014
We have all heard the old joke about the way you can tell if a politician is lying is by watching their lips; if the lips are moving the politician is lying. Well that may be a little strong but we now have mathematical proof that more than half of the people in Washington are willing to lie when it comes to how our U.S. Government manages and reports our financial condition. The U.S. Government has been using corrupt and fraudulent accounting since FY1969 when LBJ convinced the Congress to move to the "Unified Budget" and continue to use Cash Accounting as the basis for budgeting and reporting our financial condition. We have been able to maintain that majority of liars in Washington for now 46 years and the U.S. Government continues to use this corrupt and fraudulent accounting system.
As a result, the U.S. Government has been running a massive Ponzi scheme (USAPonzi) since FY1969. The U.S. Government should be using an accounting system that reflects the impact of the liabilities for the social benefits that the U.S. Government has promised to the U.S. Citizenry. The U.S. Government should either tax the U.S. Citizenry sufficiently to meet these social benefit promises OR come right out and tell the people they were just kidding, they cannot pay these benefits. The only way to tell what social benefits are affordable is to use an accounting system that appropriately assesses the financial impact of these future commitments.
Every member of the U.S. Government needs to ask themselves the question; do I support moving to an accounting and budgeting process that accurately reflects the financial health of the United States of America or do I choose to continue to lie to the American people by using corrupt and fraudulent accounting? It is a lie to tell people that the U.S. Government will pay them social benefits when the U.S. Government does not have the money. The Government is currently $78.5 Trillion short of having the money to pay the current social benefit commitments and that is over and above our current debt of $17.4 Trillion.
The U.S. Government must convert to the same GAAP Accounting methodology that the Government requires for U.S. Corporations and it must also use Fiscal Gap Accounting when assessing the even longer term impact of these social benefit promises (see Fiscal Gap Accounting).
The U.S. Government started, as near as I can tell, preparing GAAP basis financial statements in the year 2000 and according to www.shadowstats.com we now have a GAAP Obligation of $95.9 Trillion (as of June 1, 2014) and have an expected GAAP deficit of $6.4 Trillion in FY2014.
Congress you must
Start telling the truth!
Use proper accounting!
And balance the budget!
Yes I know that people will say that we cannot do that right now because it would kill the economy if we were to stop even our Cash basis deficit spending of $500 Billion in FY2014 let alone our GAAP basis deficit spending of $6.4 Trillion in FY2014. The ONLY reason the U.S. economy is growing right now, instead of dramatically contracting, is because of USAPonzi and the massive stimulus of the unreported GAAP basis deficit spending. But that is the nature of a Ponzi scheme, when it implodes it can be catastrophic for the victims of the scheme. Our economy is receiving a massive stimulus (see U.S. "Real" GDP now see an update to this analysis U.S. "Real" GDP June 2014) as a result of USAPonzi and people like that and do not want it to stop. But the Madoff investors also liked the returns that Bernie Madoff was reporting to them and did not want that to stop either but it eventually had to come to an end just like USAPonzi will have to come to an end.
We have got to quit kidding ourselves (and lying to the U.S. Citizenry) and face the music!
But the fact remains that we have a majority in Congress that is willing to continue to tell "The Big Lie".
Although it is still possible that not everyone in Washington is a Liar and a Cheater we have clear evidence that at least half of them are willing to lie to the U.S. Citizenry by telling them that they will get social benefits that are totally unfunded (and unaffordable).
Congressperson, ask yourself: Where do you stand? Will you continue to lie or will you finally tell the truth?
The Securities and Exchange Commission Knows
I have now sent 5 formal letters and many other emails to the U.S. Securities and Exchange Commission (SEC), which is responsible for identifying fraudulent financial activity, expressing my contention that the U.S. Government is using corrupt and fraudulent accounting. So far I have only received two responses from the SEC. The first response came from the SEC Inspector General acknowledging the receipt of my Jan 27, 2014 complaint letter and the second response was a customer satisfaction survey which I dutifully responded to (I did not give them a favorable rating). But how does the SEC take action against the most powerful Government on the Planet when the SEC knows that a majority of the people in that Government are ready and willing to lie (by $78.5 Trillion) about the financial condition of arguably the most important financial entity on the planet; "The Government of the United States of America".
The SEC knows full well what the problem is but chooses to do nothing.
The U.S. Treasury Department Knows
The U.S. Treasury Department has, for the last few years, included a section in their annual report of the U.S. financial condition that clearly shows that our current fiscal policy is unsustainable and that our debt will spiral out of control over the next few decades. (see The Treasury Assessment) This same report even tries to scope the actions required to correct this out of balance condition but I say their proposed solution is a "fairy tale". But the U.S. Treasury department, the U.S Treasurer, the CBO, the OMB, and the GAO all know it is a problem and know full well what is causing the problem but they don't really want the problem fixed. If the problem got fixed and fixed properly many and I mean MANY of these people would find that their very jobs are at risk because the Government is lying about our financial condition by nearly $6 Trillion a year and if the Government was operating with proper accounting our Federal Government would have to be dramatically downsized.
The Treasury Department knows full well what the problem is but chooses to do nothing.
The President and the Congress both Know
President Clinton and President Obama both created commissions to assess our fiscal situation and prescribe a plan that would put us on a sustainable fiscal path. Both presidents and both of their congresses chose to ignore the findings of these commissions. Responding to the TRUTH that came out of these commissions was just too painful for them to accept so they chose to continue to operate USAPonzi.
The President and the Congress both know full well what the problem is but choose to do nothing.
"The Emperor's New Clothes"
So, my conclusion is that we have a situation like what Hans Christian Andersen portrayed in his fairy tale about "The Emperor's New Clothes". Everyone knows it is a problem but everyone is afraid of what the Emperor might do if they confronted him OR in this case since almost everyone appears to be a beneficiary of USAPonzi, they can tolerate seeing the Emperor run around naked as long as he will continue to operate the Ponzi scheme.
We as a country have been Living Beyond our Means for nearly half a century because of USAPonzi and when reality sets in it is going to be very painful.
It will lead to a financial catastrophe of epic proportions.
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