|
OVER $50
TRILLION IN DEBT AND UNFUNDED LIABILITIES |
THE FEDERAL
GOVERNMENT KEEPS THREE SETS OF BOOKS |
POLITICIANS
CANNOT SOLVE THE PROBLEM WITHOUT PUBLIC DEMAND |
| 1) Our current government
accounting methods do not reflect future insurance
obligations to retirees under Social Security, Medicare, and
Medicaid, as would be required of any other licensed
insurance company. |
| 2) The net present value of
retirement benefits promised to the 70 million Americans of
the "baby-boom" who will begin retiring in 2012 combined
with the present value of treasury debt on the market
exceeds fifty trillion dollars ($50,000,000,000,000). |
| 3) No action has been taken
to correct this crisis because since it's inception these
retirement benefit programs have operated on the basis that
"current workers pay for current retirees". Because the
ratio of workers to retirees is falling drastically, this is
an unsustainable arrangement. |
|
| 1) In the U.S.,
private and public corporations are required to maintain
their accounting records based on accrual accounting
methods. Accrual accounting is designed to fully account
(accrue) for all liabilities of the organization. In
contrast, the Federal Government and politicians most
frequently report to the American people using the dubious
"cash basis" accounting which only keeps track of cash
inflows and outflows of a current period. If a large
liability like future Medicare obligations occurs due to a
citizen retiring, that future liability is not reported. |
| 2) The 3 sets
of books are: A) The "Official Budget", a simple cash-In
cash out reckoning that allows current FICA "premiums" to be
used to pay for general expenses; B) The "Audited Version"
budget which includes recognition of future obligations for
mandated retirement benefits to military personnel and other
federal employees. C) A third unpublished version which
includes the net present value of retirement obligations
(social security, medicare, and medicaid) incurred for
citizens retiring in the current year. |
| 3) If any
licensed insurance company reported as the U.S. government
does, and failed to fund the net present value of the
actuarial estimates of it's obligations to policyholders,
the executives of that insurance company would almost
certainly face serious legal charges. And the total scope of
the loss would eclipse the combined total of Enron, Worldcom,
Adelphia, and other famous cases of corporate collapse. |
|
| 1) Like any employee, an
elected official wants to keep their job. Among other
things, they can't serve their constituents if they're not
in office. |
| 2) There are two primary
ways for a politician to boost their popularity (and keep
their job): A) Increase voter benefits and B) Decrease voter
taxes. |
| 3) There are two primary
ways for a politican to lower their popularity (and risk
losing their job): A) Decrease voter benefits and B)
Increase voter taxes. |
| 4) Politicians are
constantly trying to "trap" their opponents doing one of the
above 2 "bad" things. They can use (and exaggerate) this in
their campaign marketing. We also see governors working
against legislatures, House against Senate, etc. in similar
fashion. |
| 5) Politicians must also
respond to issues that are very high profile and reflect
durrent popular demand. Since there's no such demand from
the public to resolve this crisis, largely because most
voters aren't aware of it, politicians are reluctant to "go
too far out on a limb" and champion a potentially unpopular
cause (cutting benefits) that their opponents could take
advantage of. |
| 6) For the above reasons,
expecting politicians to take the lead on this issue is
foolish. This is one situation where "we the people" must
act. Part of that action must be SUPPORT of elected
officials who are willing to tackle this very challenging
issue. |
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