By Mencken’s Ghost
February 18, 2009
The Treasury Department has written an obituary of the United States. You’ve probably not heard anything about it, because the mainstream media has been too busy covering the political game in Washington to read the obituary and thus understand that it’s all over for the nation, except for the burial of the rotting, maggot-infected body politic.
The obituary is the 2008 Financial Report of the United States Government, published by the Treasury Department, with a cover letter from former Treasury Secretary/Chief Undertaker Harry Paulson. The report is 206 pages long, which is 204 pages longer than the attention span of the typical journalist, 205 pages longer than the attention span of members of Congress, and 205.5 pages longer than the attention span of readers of USA Today.
This commentary summarizes what the obituary says, but if you want to read the entire depressing document, it can be found at:
Keep in mind that the obituary was written before President Obama’s stimulus bill and Treasury Secretary Geithner’s proposed TARP II. Because the nation is financially deceased, both of these spending schemes rely on grave robbing for their funding.
For a product of a government bureaucracy, the obituary contains some strong language. It uses words like “not sustainable” to describe federal fiscal policy and says that current and projected budget deficits and debt will eventually lead to “renewed financial and economic insecurity.” It also warns that without significant changes, the government will be unable to manage a future financial crisis like the one today.
Wouldn’t you think that such a dire warning would be front-page news? Hello, are you still with me, or are you moving your lips as you struggle with the third-grade prose of USA Today?
Sobering charts are scattered throughout the obituary. For example, Chart 2 on page 2 shows that government debt held by the public will be 650 percent of GDP by 2080. For comparison, it was “only” 109 percent during World War II, when the last record was set.
Have you seen this chart on the front page of your hometown newspaper? Oh, that’s right: Instead of the chart, you saw a photo of President Obama’s last town hall meeting, where the president made wine out of water, distributed manna from heaven, and healed lepers.
Even more sobering than Chart 2 is the federal government’s balance sheet, which is shown on page 10 of the obituary. It lists assets of $1.9 trillion, liabilities of $12.1 trillion, and the difference between the two of a negative $10.2 trillion. The bonds of a corporation with such an unhealthy balance sheet would be rated as junk bonds.
Then there is the footnote to the balance sheet in fine print. It says that the unfunded liability of $49 trillion for Social Security and Medicare is not counted as a liability on the balance sheet.
An addendum to the obituary is titled, “Management’s Discussion and Analysis.” Table 1 on page 3 shows changes in the federal government’s cost of operations from 2007 to 2008. In that one year — buckle your seatbelt and assume the crash position — liabilities for “postemployment” benefits (i.e., retirement benefits) for veterans and civil servants increased from $90 billion to $550 billion, an increase of over 600 percent. Did your employer increase retiree benefits by 600 percent? Heck, even General Motors hasn’t been that irresponsible.
Exhibit 2 is an exhibit of irony. It graphically shows how consumer banks, investment banks, and Fannie Mae and Freddie Mac had securitized mortgages and caused the mortgage meltdown. It’s an exhibit of irony because Harry Paulson had headed an investment bank before becoming Treasury Secretary. Of course, almost all of the former and current heads of the Treasury and the Federal Reserve, other than a few academics, have been members of the same exclusive banking club, rotating between the private sector and the government. No conflict of interest there.
Exhibit 3 on page 13 will make you pull your hair out and rend your clothes. It tries to explain the government’s financial statements and how the administration’s statements differ from the Treasury’s. No doubt, Enron designed the statements. To save your hair and clothes, let me give you the bottom line: The net operating cost of the federal government increased 266.3 percent from 2007 to 2008.
Eager-beaver reporters and editors from the mainstream media have certainly reported this figure. Right?
Treasury management then proceeds to lie about the performance of federal managers, claiming that considerable progress has been made by the managers of federal agencies in producing reliable financial reports. Then a letter from the General Accounting Office says otherwise. To quote:
“The material weaknesses discussed in our [audit] report continued to (1) hamper the federal government’s ability to reliably report a significant portion of its assets, liabilities, costs and other related information; (2) affect the federal government’s ability to reliably measure the full cost as well as the financial and nonfinancial performance of certain programs and activities; (3) impair the federal government’s ability to adequately safeguard significant assets and properly record various transactions; and (4) hinder the federal government from having reliable financial information to operate in an efficient and effective manner.”
Translation: The government cooks the books.
Yet the Obama administration can tell you precisely how many jobs will be produced by the stimulus bill.
Oh, get this: The Federal Reserve isn’t audited because it is considered a private entity. Even more shocking, the most public institution of all, Congress, isn’t audited, either.
On page 151 you can find doublespeak that makes the newspeak in George Orwell’s 1984 seem like straight talk. There you’ll find a definition of “Unexpended Budget Balances.” Before reading it, sit on your hands so you don’t pull your hair and rend your clothes. Okay, here it is: “Unexpended budget balances consist of the unobligated and obligated, but unliquidated, budget balances.”
Got it? If you do, please explain it to me.
Page 151 also has a table showing the gross unfairness and lack of social justice of the tax code. For example, those earning between $30,000 and $50,000 pay $2,043, on average, in federal income taxes, or a whopping 6.1 percent of their adjusted gross income. Those earning $200,000 or more pay $133,380, on average, or a measly 22.4 percent of their adjusted gross income. Clearly, the fat cats aren’t paying their fair share. (I’m practicing to be a Marxist so I can get a job in the administration. How am I doing?)
I’m going to stop here, because after reading the 206-page obituary, I’m now completely bald and naked from pulling my hair and rending my clothes.
Maybe I’ll see you at the nation’s funeral. I’ll be the bald, naked guy weeping over the demise of a once great country. No doubt, because of its titillation value, my photo will be published on the front page of your hometown newspaper. However, in keeping with media tradition, an intelligent explanation of the tragedy that caused my nakedness and weeping will not be provided.
”Mencken’s Ghost” is the nom de plume of an Arizona writer who can be reached at firstname.lastname@example.org.