Hurry up and Die

About six weeks ago, I wrote about the federal deficit jumping 40% in five years to $8.2 trillion, but that’s deceitful. Turns out, the real, accrued exposure is actually $46 trillion, up from $20 trillion in 2000. When accrual accounting standards, not lemonade-stand accounting practices, are applied to the federal government balance sheet, the US is headed toward a perfect storm of fiscal collapse. As a worker today, you owe $375,000. The best way to avoid paying your share is to hurry up and die before the IOU comes due. If that's not an option...

While the President pushes for permanent tax cuts on his weekly radio address and brags that the deficit declined from $412 billion in 2004 to $319 billion in 2005, he does not tell you that the net operating loss of the US government increased from $616 to $760 billion during the same period. Basically, the US government is paying the mortgage with a credit card and saying the deficit (the mortgage) is going down. Every business person knows that the credit card charge is an accrued expense. Debt is debt, except to this creative president and congress.

Don’t take my word for it, read The 2005 Financial Report of the United States Government from the Treasury Department. Surprisingly, this is relatively easy read, and it’s full of interesting, sometimes hair-raising, graphs.

BTW, the report starts with a letter from Treasurer John W. Snow, who cherry picks the data and snow-jobs the reader into believing 2005 was a fabulous year and the increase in net operating loss was a one-time event. This view isn’t supported by the data in the report. John Snow is a politician, not a treasurer, and hope is not a strategy.

“The federal government’s fiscal exposures now total more than $46 trillion, up from about $20 trillion in 2000. This translates into a burden of about $156,000 per American or approximately $375,000 per full-time worker, up from $72,000 and $165,000 respectively, in 2000. These amounts do not include future costs resulting from Hurricane Katrina or the conflicts in Iraq and Afghanistan. Continuing on this unsustainable path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security.”

BTW, if you look at the Appendix, you will know that the federal government is clueless about its own assets, a dozen agencies are not included in the accounting, and the DOD (military) is financially underestimating its future obligations to clean up pollution and pay veterans claims.

The bad news about this dire warning is that it is an understatement. In major spending areas, expenditures exceed income for the next 70 years with some gaps growing almost exponentially. Just ten years from now, the US government falls into a fiscal abyss.

This president and congress are the most fiscally reckless leaders in US history. In 2002, Congress suspended the “pay as you go” rules to hide the problem, removing accountability to keep costs and expenditures in balance. It appears the culture of fiscal deceit is not just a corporate problem.

Just as Enron collapsed, so will this shell game. Forget about terrorists, Iraq, illegal immigration, intelligent design, the government listening on your phone calls, the right to wear flags on your clothing, gay marriage, and sex on TV. If you care about America, the greatest threat to its future is financial malfeasance.

• Move into a fixed mortgage. Consider interest only for 10 years, because real income will fall precipitously and home values will drop 10 years from now. Consider downsizing your home.
• Continue to invest in the US economy for up to 5 more years, and then move money outside the US before the fall.

• Demand US converts from cash accounting to accrued accounting. Only when we have accurate accounting can we measure the problem and target real change.
• Demand the reinstate of the “pay as you go” budget controls.
• Insist all departments and all costs are included in the budget analysis.
• Insist the US implement asset management, so it knows what it owns, who has it, what it is worth, and what maintenance costs are needed to sustain and increase asset value.
• Spread the word. Don’t let the press’s ignorance and laziness hide the biggest fiscal fraud in US history.
• Give money to any politician that agrees with the above, and vote out all others and tell them why.

 Or hurry up and die, and let someone else pay the bills.

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Michael Cushman, The Engaging Guru, wants you to master enrolling others in your truth, get the goodies of life, and change the world.  www.engagingchange.com