January 9, 2014
Open Letter to:
The Supreme Court of the United States of America
Eric Holder U.S. Attorney General
The President of the United States of America
The Congress of the United States of America
Harry Reid Senate Majority Leader
John Boehner Speaker of the House
John Cornyn Texas Senator
Ted Cruz Texas Senator
Ben Bernanke Outgoing Federal Reserve Chair
Janet Yellen Incoming Federal Reserve Chair
Paul Ryan House Budget Committee Chair
Patty Murray Senate Budget Committee Chair
Tom Coburn U.S. Senator (R) Oklahoma
Erskine Bowles Co-Chair, National Commission on Fiscal Responsibility and Reform
Alan Simpson Co-Chair, National Commission on Fiscal Responsibility and Reform
David A. Vaudt Chairman Government Accounting Standards Board
Steve Forbes American Publishing Executive
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 Television Personality-FOX News
Lou Dobbs Television Personality-FOX News
Bill O'Reilly Television Personality-FOX News
Greta Van Susteren Television Personality-FOX News
Bill Moyers American Journalist
Rush Limbaugh Radio Personality
Doug Casey Economic Newsletter-CaseyResearch.com
George Friedman Global Intelligence Newsletter-Stratfor.com
Michael Tanner Senior Fellow-Cato Institute
John Mauldin Financial Newsletter-MauldinEconomics.com
John Williams Financial Newsletter-ShadowStats.com
Robert Shiller Nobel Laureate in Economics
Paul Krugman Nobel Laureate in Economics
Jeremy Siegel Economics Professor-Wharton
Laurence Kotlikoff Economics Professor-Boston University
Gerard Baker Editor-in-Chief Wall Street Journal
Scott Burns Newspaper Columnist-Dallas Morning News
Will Deener Newspaper Columnist-Dallas Mornin
The following letter was sent to the SEC on January 8, 2014:
January 8, 2014
To: Mary Jo White Chairwoman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
From: John W. White
2804 Fenwick Lane
Plano, TX 75093
I am a Whistleblower!
I contend that the fiscal policy of the Government of the United States of America is corrupt and fraudulent! By using Cash Accounting to assess and report our financial condition the Federal Government has been able to conceal from most people in the U.S. and the rest of the world just how much in debt we truly are. We must begin using an accounting system that reflects our true financial health.
I contend that every Member of Congress and every senior member of the Administration should be indicted on fraud and corruption charges if they vote for or support any financial budget that is based on our current Cash Accounting methodology.
I contend that the U.S. Government has been using this fraudulent accounting since Fiscal Year 1969 to assess and report the financial condition of the U.S. Government. By using simple Cash Accounting to report our annual deficit and our financial liabilities the U.S. Government is misleading anyone that chooses to invest in U.S. Treasuries. Further, this fraudulent accounting is misleading the U.S. citizenry that is counting on receiving the social benefits and pension payments that the Federal Government is promising. Further many individuals and corporate entities are making their own financial commitments based on the assumption that the United States Government will be able to meet these currently promised financial commitments.
It is clear to me that the Government has made commitments to citizens and to corporate entities that cannot possibly be met with the current flow of funds from tax revenues and is concealing this by using Cash Accounting. Ever since the U.S. Government converted to the “Unified Budget” for Fiscal Year 1969 and made the choice to continue to use Cash Accounting, the Government has been operating a massive Ponzi scheme that has, according to most reasonable assessments, created Unfunded Liabilities (based on GAAP Accounting) on the order of $76 Trillion in addition to the currently reported Cash Debt of $17.2 Trillion.
I would like to get an explanation from the Federal Government as to how the Government plans to meet the commitments that are represented by this total Obligation of $93.2 Trillion.
Debt $17.2 Trillion
Unfunded Liabilities $76 Trillion
Obligation $93.2 Trillion
(As of January 1, 2014)
I have created a website www.usaponzi.com that analyzes this Ponzi scheme and makes projections as to what might happen when this Ponzi scheme implodes. This website provides a spreadsheet model of the U.S. Government financials for the next ten years that includes both Cash Accounting and GAAP Accounting assessments of our financial health.
This GAAP Accounting assessment of our financial condition uses the accounting methodology that the Government itself requires that companies use to report their financial condition and shows our GAAP deficit to be over $6 Trillion when our Government reported Cash deficit is about $700 Billion.
How is it possible that arguably the most important entity in the world can continue to utilize this inappropriate accounting methodology to represent its financial condition and do so for now over 45 years?
It is further my contention that we will see a cascade of personal and corporate crises when the Federal Government finally acknowledges that it is unable to meet the financial commitments and subsidies that the Government is currently promising. This could be a catastrophe of epic proportions that could be mitigated to some degree by prompt action by the Congress to reduce these promises to sustainable levels. It will be traumatic at the very least but continuing to perpetrate this Ponzi scheme will only make the implosion, when it does happen, even that much more traumatic.
To address the impact of this problem on future generations, there is now an effort underway to bring a bipartisan bill (The INFORM ACT) to Congress that proposes the use of fiscal gap and generational accounting for assessing and reporting our fiscal health.
The INFORM ACT is a bipartisan bill introduced, in the Senate, by Senator Kaine (Democrat from Virginia) and Senator Thune (Republican from South Dakota) and co-sponsored by Senator Coons (Democrat from Delaware) and Senator Portman (Republican from Ohio). Congressman Cooper (Democrat from Tennessee) and Congressman Shock (Republican from Illinois) have introduced the bill in the House.
The INFORM ACT requires the Congressional Budget Office (CBO), the General Accountability Office (GAO), and the Office of Management and Budget (OMB) to do fiscal gap and generational accounting on an annual basis to assess the sustainability of fiscal policy and measure, on a comprehensive basis, the fiscal obligations facing our children and future generations. The ACT also permits Congress to request fiscal gap accounting and generational accounting to evaluate major proposed changes to fiscal policy.
The website www.theinformact.org provides information regarding this act.
Making a change of this magnitude in our financial reporting will require significant endorsement of the need for the change by distinguished stakeholders and a thorough education of the U.S. citizenry. This website has already started that process by getting the endorsement of over 1000 economists including 15 Nobel Laureates in Economics.
We have a U.S. Economy that is riding on the full faith and credit of the Federal Government and we are essentially in debt by $93 Trillion (GAAP basis) and by $205 Trillion (Fiscal Gap basis) with an income stream of currently about $2.8 Trillion per year to both pay our current bills and to service this debt. Our current Cash Accounting methodology does not appropriately reflect the magnitude of this current liability. As is evident by this Fiscal Gap assessment the "virtual interest" on our "virtual debt" is more than twice as big as our "real" income.
The further complication will be that by taking the actions necessary to resolve this issue we will dramatically reduce our economic activity which will in turn reduce that real income stream. But we really have no choice as we must assess and report properly before we can truly fix the problem.
This problem must be communally accepted by Congress and the U.S. citizenry but prompt action by Congress to consider and approve the INFORM ACT is essential to getting the United States of America on a sustainable fiscal path.
I feel that it is incumbent on the Securities and Exchange Commission to treat the U.S. Government just as it would any other entity and require that the U.S. Government use an appropriate accounting methodology.
Do you agree?
Will you support The INFORM Act?
Will you take the appropriate action in your role as Chairperson of the U.S. Securities and Exchange Commission to seek the necessary changes in our Government's accounting to accurately reflect our financial condition?
John W. White
Retired Information Technology Executive
2804 Fenwick Lane
Plano, TX 75093