Paul Ryan's FY2015 Budget Plan Falls Short
Apr 3, 2014
Paul Ryan, Chairman of the House Budget Committee, is a "Fiscal Fake". This is how David Stockman assesses Paul Ryan's ability to correct our fiscal crisis. Stockman has also called Mr. Ryan's budget plan a "Fairy Tale". And David Stockman is correct, Ryan's plan is a "Fairy Tale".
Apparently Paul Ryan does not fully understand the severity of our fiscal crisis and the distortion it is creating in our financial system. In my May 2013 commentary (A Nation Fooled!), I stated "I feel sure that Paul Ryan knows it is a Ponzi Scheme". Apparently I was wrong in that assessment. The budget deal that Paul Ryan and Patty Murray came up with in Dec 2013 was my first clue that he does not really understand just how serious our financial crisis is and now with his claim that his FY2015 budget plan will balance the budget in ten years convinces me that even Paul Ryan does not understand the pickle that we are in.
How can we ever get this problem fixed when the point man for the "fiscally conservative" wing of the Washington establishment does not fully understand the problem. We have got to get a crew of noted economists (Nobel Laureates in Economics) to testify in front of a joint meeting of the House and Senate Budget committees and explain to them what the Government of the United States of America is doing to our country and to the U.S. and global economy by using fraudulent accounting.
Claiming that by cutting $5 Trillion of spending over a ten year period (and this is just trimming the rate of increase) will fix our problem when our GAAP basis budget deficit is more than $6 Trillion a year and we are already in a $94.8 Trillion hole (our GAAP Obligation) is absolutely asinine.
Until Congress understands that they are lying about our fiscal status by using fraudulent accounting (using Cash Accounting rather than GAAP Accounting) we cannot expect to get this problem resolved. I really thought they knew what was happening and were just willing to continue to fake it with the U.S. citizenry but I now think that many of them really don't understand the problem. I do however think that Jeb Hensarling understands the problem.
Again I say, which is worse? Not knowing or knowing and not telling?
Paul Ryan has now put himself in a "no win" situation and up until now I really thought (hoped) he was trying to do the right thing for the country. Why do I say that Paul Ryan is in a "no win" situation? Because even if he wins the battle to get his budget plan through Congress and implemented he will still lose since the nation will then find out that his plan does not solve the fiscal crisis. With his claim that by cutting $5 Trillion over ten years fixes the problem he demonstrates to me that he thinks balancing the Cash basis budget (current Cash Deficit is about $500 Billion) will fix the fiscal imbalance when we must balance the GAAP basis budget which currently (FY2014) indicates a GAAP Deficit of $6.4 Trillion.
So Paul Ryan's plan only addresses 8% of the problem.
And sadly he is getting beat up because most of Congress thinks that he is being much too draconian with his proposed budget cuts when in fact they need to take actions that are 12X larger than what he is proposing.
And that is why I am trying to convince the Securities and Exchange Commission to get the U.S. Government to follow it's own rules and use GAAP Accounting. And as Dr. Laurence Kotlikoff explains, even current GAAP Accounting rules do not completely assess all of the liabilities that our Government is incurring with our social benefit promises. We also need to enhance the GAAP rules to be consistent with Fiscal Gap Accounting.
Until every member of the U.S. Government acknowledges the fact that they have been using fraudulent accounting since FY1969, I contend that we stand no chance of getting our fiscal crisis resolved.
Next Page: "The Big Lie"