Image courtesy of bowenmurphy under CC BY-NC 2.0
What a number. Not only is it an enormous record deficit, but it’s the telephone prefix Hollywood uses in its movies. It’s certainly easy to remember. It should be ingrained in every taxpaying citizen’s mind and tattooed on the forehead of all Congress critters.
Tuesday, September 30, 2003, at midnight, the federal government reached the end of its fiscal year. The final recorded national debt is $6,783,231,062,743.62 ($6.8 trillion) or an increase of $555 billion over last year.
Of course, the government will claim that the deficit was only $370.9 billion ($371 billion) as they record it in Enron debt hiding fashion. We’ll get to this in a moment.
It was just about a month ago that the General Accounting Office was predicting a deficit of $455 billion and then a few weeks later said it was going to be $401 billion or thereabouts. It’s interesting that we end up with a final figure of $371 billion even by their way of accounting.
Wednesday, October 1st, the very next day and the first day of the new fiscal 2004, the national debt went up $21.3 billion which is indicative of some shenanigans to make the 2003 picture look a little better, but it isn’t the whole story.
One of the other factors is what has been described as “the perfect storm” in the bond market which translates into the government finding it more and more difficult to sell as many treasuries, borrow as much money, as it would like. Due to a combination of factors, investors normally willing to contract with the government for “the safest investment in the world” are finding other places to put their money, including a temporary increase for the New York Stock Exchange.
For instance, on Wednesday, September 10th, the Treasury put $33 billion worth of 5-year notes on the auction block and only $11.8 billion were sold to investors. And most of those loans may have come from foreign countries. By itself, China loans us more than $300 billion a year.
The real danger here is that if enthusiasm to loan the government money deteriorates further the borrowholics of Washington may find it difficult to replace existing loans as fast as they mature. Thus, the government would find itself in the unusual position of having to pay down the national debt whether they like it or not.
In his “something for everyone” introduction, Mr. Van Zeck, the little known head of the U.S. Treasury’s Bureau of Public Debt claims that he “borrows about $2 trillion each year by conducting some 140 auctions, as well as through the continuous sale of savings bonds at 40,000 locations throughout the country.” Most of this is simply to hold the national debt even, to replace maturing securities without adding new debt.
The federal government’s finances are so riddled with fraud and corruption, it’s difficult to even get a handle on where to start corrections, but let’s try.
The Mess.
Knowing full well that their revenue was estimated at $1.84 trillion for the year, the federal government went right ahead and willy-nilly planned a fiscal 2003 budget of $2.14 trillion. They were perfectly willing to run a $304 billion estimated deficit right off the bat.
When actual receipts for fiscal 2003 turned out to be only $1.66 trillion, then the government had an even bigger problem and an even larger deficit.
As if that wasn’t irresponsible enough, the budget for fiscal 2004, the adventure we just began, is planned for $2.2 trillion while receipts are somehow estimated at about $1.9 trillion. Does this make sense to you? Do you feel things are getting better and people are going to pay more in taxes than they did last year?
We’ve gone from dealing with the pie-in-the-sky bubble economics of the Clinton era to terrorists-in-the-sky economics caused by people we’ve trampled who will probably never use the same destructive methods twice. And we haven’t even come to the fraudulent part of our own government’s accounting.
The Enron style double bookkeeping employed by the government revolves around the use of a “unified budget” when convenient and talk about being “over budget” when it’s not. Bear with me on this.
First of all, since 1983 when substantial increases in payroll taxes began, Social Security and Medicare have always produced a surplus—more money than was needed for payouts. Most of the other entitlements also do this, but not consistently. Surpluses are not gone, they’re just hidden.
In fiscal 2000, Social Security alone produced a $95.4 billion surplus. In fiscal 2001, it was $98.7 billion. In 2002, it was $89 billion despite high unemployment and underemployment. And in fiscal 2003, it hovered around $76 billion (we’ll have the exact number in three weeks).
In fiscal 2003, the reason that the government will claim a deficit of $371 billion while the true deficit was actually $555 billion is that the government’s figure does not include the money stolen (they call it “borrowed”) from Social Security and other entitlements. They are using the “over budget” method.
Since the Social Security and other entitlement surpluses were included in their planning of the fiscal 2003 budget, included as “off budget” estimated revenue, they cannot be considered part of being “over budget” even though this is always represented as “borrowing” just as every Treasury security they sell legitimately. Isn’t that convenient?
Yet, when it comes to the “unified budget,” these same surpluses are counted both as an asset and as a liability—double bookkeeping of the highest order.
For instance, in fiscal 2000, the year of the nation’s largest surplus, you heard plenty about the $237 billion surplus that the Clinton administration had “saved” and even how they paid down the national debt somewhat, but you didn’t hear anything about where that surplus came from.
Well, $87 billion came from income tax overcharges, both corporate and individual. And $150 billion ($149.8 billion) came from entitlement overcharges with Social Security leading the pack at $95.4 billion and seventeen other entitlements, including Medicare, making up the difference of $54.4 billion.
What’s more, the Clinton/Gore administration did actually take $230 billion of this surplus and throw it against the national debt. It was enough to keep the national debt to a mere $18 billion increase in fiscal 2000. The lowest increase we’ve ever had, but still another increase. The national debt will never decrease with such small payments.
All anyone has to do is plug the national debt figure into any mortgage model available on the Internet or your local mortgage lender bank to see that with payments of $350 billion a year and an unrealistically low interest rate of .05 percent, it would take more than 50 years to pay off the debt we’re leaving for our children and grandchildren.
The trouble is that when the government steals/borrows $150-to-$200 billion a year from entitlements, it increases the national debt by precisely that amount. Add annual interest paid against the previous year’s balance on top of that and the national debt goes up even further, your liability increases. And interest is paid by simply handing the bogus trust more bogus debt markers, no money involved.
In fiscal 2000, if the government had used the “over budget” way of accounting, the surplus would have been $87 billion. In fiscal 2001, instead of a surplus there would have been a deficit of $33.5 billion. You can see the advantage to their crooking the books.
It gets worse.
By far, the greatest crime is the “Pay-It-Again, Sam” scam run by our government through bogus trust funds, bogus securities, and 42 percent of the national debt being absolutely fraudulent, but what Alan Greenspan calls an “enforceable” part of double taxation plus interest. The Taxpayers Union for Financial Freedom (TUFF) has an entire web site devoted to this subject.
During the Second World War, the American public developed a tremendous spirit and willingness to forego luxuries and daily conveniences in support of the war effort and the economy.
Women went to work in factories and on weekends children were trucked to farms to replace the men off fighting for their country. We had rationing, where people were given stamps limiting the amount of meat, sugar, gasoline, nylons, and other standard items they could purchase because there were “shortages.” We flattened tin cans by stepping on them, putting them in baskets and at the curb so boy scouts could pick them up along with all the bundled paper being recycled for the war effort. The whole idea was to save, to do without or get by on less.
What have we got today when we have a never ending war on terrorism to support, countries we’ve invaded to rebuild, and an economy that’s starting to resemble the Great Depression of the Thirties?
We’ve got a bunch of nitwit financial wizards and laugh-a-lot media news readers telling us that the economy will pick up when consumers spend more money. Get out there and shop ’til you drop. Splurge and go deeply in debt like your government. Go figure.
On top of that, we’re approaching an election year where not one single candidate from any party is addressing the inequities, injustices, and criminal behavior outlined above. Not one.
“Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact.”