Letter to Congressman Neugebauer
July 13, 2016
The Honorable Randy Neugebauer
House of Representatives
19th District, Texas
1424 Longworth House Office Building
Washington, DC 20515-4319
Dear Congressman Neugebauer
First of all, I cannot thank you enough for the courtesy that you have shown by responding to my April 25, 2016 letter. I know that you have a very busy schedule and get many such letters. I am honored that you have responded to mine.
I submitted that letter to each member of Congress, and a similar letter to each member of the Supreme Court, because it is my conviction that we face an extremely grave financial crisis because of the current fiscal policy of the U.S. Government. I feel that the Congress should be well aware of and prepared for this coming financial crisis.
The current fiscal policy is a Ponzi scheme that is deferring ever increasing liabilities to the future U.S. taxpayers. This cannot continue indefinitely. In fact, our US Unfunded Liabilities (GAAP) are now assessed to be $102.8 Trillion. The U.S. Government has made massive financial commitments that it cannot possibly keep. The U.S. Government will be forced to default on some of these financial commitments so a lot of people will not be happy when the U.S. Government decides what it can pay and what it cannot pay.
As you say in your letter, we have a serious debt problem that must be addressed but in my opinion addressing the debt issue is only working on about 20% of the problem. In addition to the current debt, we have an indication of future debt called Unfunded Future Liabilities which now total $83.5 Trillion according to www.usdebtclock.org. As you say in your letter to me, our debt is increasing by $30 Billion a week but our Unfunded Liabilities, which includes the debt, are increasing by $110 Billion a week (GAAP Deficit in FY2016 $5.74T/52 = $110.38B).
|Cash Deficit in FY2016
|GAAP Deficit in FY2016
|Unfunded Future Liabilities
|US Unfunded Liabilities (GAAP)
Source: www.usdebtclock.org Jul 13, 2016
The fundamental problem that Congress must address is the use of the proper accounting system. In order to meet the pensions, veteran’s benefits, and social benefits the U.S. Government has promised, the U.S. Government must adopt GAAP (Accrual) Accounting. Because the U.S. Government is using Cash Accounting, it is not assessing nearly enough tax revenue to fund these future commitments.
As the above table shows, the U.S. Government reports a Cash Deficit of $0.52 Trillion when proper GAAP Accounting show a GAAP Deficit of $5.74 Trillion. (GAAP means Generally Accepted Accounting Principles). GAAP Accounting, sometimes called Accrual Accounting, calls for accruing the funds required to meet future commitments as soon as the commitment is made.
The current fiscal policy has the following issues that need to be addressed.
1) The U.S. Government must use GAAP Accounting.
2) The U.S. Government must balance the GAAP basis budget.
3) The U.S. Government is spending the tax revenue paid in for future social benefits to pay current period operating expenses.
4) The U.S. Government has no money in the social benefits trust fund (Unfunded Future Liabilities = $83.5 Trillion). The U.S. Government is spending all cash tax receipts each year and then still has to borrow more money to finance its over spending.
5) The U.S. Government is not collecting nearly enough tax revenue to fund its future commitments. This is why GAAP accounting is required. GAAP Accounting assesses whether proper funding of future commitments is being done.
These shortcomings in the current fiscal policy are going to create massive civil unrest in the U.S. population when the general population is made aware of these issues.
The general population will be very unhappy to find out that the U.S. Government has promised lucrative social benefits but has not funded any of these social benefit promises, especially when they are told that the shortfall is $83.5 Trillion.
The general population will be very unhappy to find out that the U.S. Government has spent the “paid in” tax revenue for future social benefits to overpay U.S. Government employees and businesses.
The general population will be very, very unhappy to find out that the U.S. Government has undertaxed the U.S. upper class by $102.8 Trillion to make them very, very rich.
The general population will be very, very unhappy to find out that the primary reason that the U.S. upper class is getting very, very rich is because the U.S. Government is not funding the future social benefit promises.
The use of the wrong accounting system plus operating with a dramatically unbalanced budget is causing severe inequities between economic classes within America and between Americans and the rest of the planet.
This dramatically unbalanced budget, $102.8 Trillion over the last 47 years, has dramatically elevated the lifestyle of all Americans relative to the rest of the planet.
Not funding the social benefit promises, i.e. not using GAAP Accounting, has cheated the Common Man. The Common Man has been promised social benefits and the U.S. Government has made no attempt to fund even one penny of these future promises.
Undertaxing the U.S. upper class by $102.8 Trillion has increased their wealth by $102.8 Trillion. The fact that the U.S. Government has given the U.S. upper class $102.8 Trillion is what has caused the wealth and income gap. The current fiscal policy, if continued, will give the U.S. upper class infinite wealth. This has colossally elevated the lifestyle of the U.S. upper class.
Let me say that one more time, the U.S. Government has given the U.S. upper class $102.8 Trillion by deferring $102.8 Trillion of public liabilities to the future U.S. taxpayers. This is why Donald Trump can appear to be able to fund his own campaign for President. This is why Bill and Hillary Clinton have been able to get rich and get $2 Billion in the Clinton Foundation. This is why Warren Buffett has a net worth of $66 Billion. This is why Tiger Woods and Michael Jordan appear to be Billionaires. U.S. Government accounting fraud appears to be making a lot of people very rich. This is why Americans can buy 18 million cars a year. This is why the rich have big houses, big cars, and many even private planes.
Overpaying the U.S. Government workers has cheated the Common Man. Why should the U.S. Government workers continuously get paid more than the U.S. taxpayers can afford to pay?
Another major problem is that once the U.S. Government assumes debt, there is no provision in the U.S. budgeting process to pay down that debt. National Debt, once incurred, is a sunk cost unless the U.S. Government makes a provision for paying down that debt.
The U.S. Government, in my view, is really unaware of the impact that future financial commitments have made on the financial operations of the U.S. Government. Until the U.S. Government starts using proper accounting to budget, assess, and report its financial status, it will be flying blind like it is right now.
Respectfully submitted by
John W White
Plano, TX 75093