The Shit that Won’t Flush from 2008
We
bailed out Fannie Mae and Freddie Mac with the government takeover in
2008. We bailed out interlinked giant
financial institutions that were encouraged to merge and balloon into financial
behemoths without recourse in our financial infrastructure. These institutions securitized, traded, and
integrated mortgage-backed securities founded on a flawed mortgage system. (Put the gonads back in the Glass-Steagall
now. The Gramm–Leach–Bliley Act in 1999 is too dangerous.) The investments controlled by these banks
affect so many retirement systems, housing and employment issues in America
that their failure would be systemically catastrophic. (Our white blood cells are useless.)
The
reality is these financial institutions disproportionately profited for years
based on the initial implementation of this system. The money to pay for the bad loan in Tampa is sitting on some Goldman Sachs or Morgan Stanley’s
manager’s Golden Parachute yacht that retired in 2006 or a bank manager from Sacramento daughter’s
college tuition. (The cheeseburger and
caviar coronary is quaking.)
Now
we have to pay for the cost of bad loans in billions of our tax dollars in
direct payments and billions more in the additional interest added to our
national debt to finance our poor planning.
The stockholders and management of these institutions should have to
incur the current declines in their companies to match with the gains and profits
that their short-term objectives and policies allowed them to benefit from
earlier on in the decade, which were never real. (McDonald’s does not offer healthcare to
part-timers.)
Politics
of the moment and our inability to reconcile long-term causal relationships
inside the public consciousness cause us to fail to hold the proper groups of
people accountable. Have we really
solved the problem with our borrowed trillions or have we just bought ourselves
time? (Second helping of angioplasty
anyone?)
Bailouts
actually prolong natural market correction because true market forces sit idle
in anticipation of the resolution from governmental interference which does not
follow natural market laws. Why would
the private sector infuse money into a financial institution that is just going
to get funded by the public’s money and then fundamentally invalidate and
devalue private equity infusion in the future?
The
problem is our markets move too swiftly to allow natural market correction to
occur on such gargantuan entities before panicking. We watch the S&P and the Dow Jones
Industrial like gas station pennies and freak out to drive across the street to
cash and metals based on smell-in-the-air herd mentalities rather than
fact-based financial statements or macro-level consumer market
innovations. Nobody wants to read
audited financials or do math. (Screw
reading.)
We
can change the tax laws affecting stock options. We can change high-end tax rates. These are America’s greatest checks on
greed. The Securities and Exchange
Commission could mandate broad-based digital stockholder voting to approve top
management compensation packages instead of rubber-stamp boards of directors,
but that crosses a public private line that is dangerous.
Regulations
like these may be a good thing in theory, because these type of entities
clearly do not understand the boundary where corporate greed eats away at the
foundation of their entity’s long-term financial health and muddles the moral
decency of their corporate citizenship, but at some point our American
ignorance is the culprit. The answer
ultimately is narrow. All we can do is
raise taxes on the top two-percent when wealth is being consolidated at the
rate it is in the top two-percent of earners or as Republicans like to call
them “job creators,” or sometimes the makers and the takers or one might say
the master and the slaves. However,
without sound moderate fiscal spending increases taxes will just be wasted. There has to be a balance. The solution is in the synthesis.
We need to recognize the tipping-point
when unfettered capitalism starts to become economic cannibalism. America
has fostered consolidations across too many market sectors to create a nation
of mergers and acquisitions.
Corporations have become monster-sized eating away at their own employee
bases’ ability to sustain a middle-class American lifestyle.
By
importing labor, manufacturing components and abdicating the responsibility to
fund health and retirement benefits of American workers for foreign
counterparts with out corresponding benefit costs, the middle-class of America
has been left on the street corner. The
cycle is coming full circle. The
diminished consumer spending created by the voided middle-class can no longer
satiate the appetites of the same corporations that have down-sized them. Corporations are hoarding money in offshore
banks betting on a tax holiday in a game of chicken with the Federal Treasury.
America’s largest employer Wal-Mart abdicates a vast number
of their “employee’s” health care to taxpayer-funded emergency rooms as an
unwritten amendment to the Walton-family constitution. Wal-Mart is not alone. (Ah, the lemmings won’t even know they’re
payin’ for it (medical, retirement, etc.) as long as the toilet paper’s a
nickel cheaper who gives a shit, when they can’t wipe their ass in a public
nursing home?) Lowering total health
care costs would boom macro-level domestic manufacturing.
In
reaction to higher federal income taxes in past markets, corporate America
shuffled the system when high-end pay was regulated to flow compensation
through stock options. This created our
convoluted capital gains taxes and exceptions which are subject to even more
tax manipulation.
In
the end lopsided stock-based compensation led to the boom and bust of the stock
market in the 1990’s to the early part of the 21st century through a
tidal wave of focus on stock prices to make earnings and bonus ratios. Money flooded in from corn-fed America
for 401ks in a cattle-drive for retirement plans. Investment firms feasted on
the once in a generational paradigm shift cash infusion and will be counterbalanced with the Baby Boomers exit around 2020.
The Genealogy of Corporate Frauds
The
major corporate frauds of the last decade, Enron, Global Crossing, Waste
Management, and WorldCom, all come back to greed and focus on meeting profit
projections entwined with predominating stock-based compensation models. Retirements leveraged in these entities
busted.
What
typically happens in fraud cases is someone on the top of a company decides
bending the rules to make the quarter’s numbers is acceptable. In a classic gambler’s mentality, management
believes profits will turn around and the company will be able to take extra
profit from a future period to make up for current fraud. In an exposed fraudulent matrix profits do
not turn around and the web of people willing to cross that line to perpetuate
the continued non-recognition of the fabricated economic reality expands.
In
a fraud triangle, people get threatened with losing their jobs. Others rationalize fraud based on supporting
their families and see no other option.
Others simply do not question the lies their superiors ask them to
follow like they are in a Milgram experiment.
In all there is an opportunity for deceit.
Exploding
frauds all end the same. The numbers
trip over their figurative feet and can not perpetuate the cycles. The bubble bursts. The fraud is exposed. Maybe some top-end executive gets slapped on
the wrist for a federal crime. Maybe
others are reprieved by death on ski slopes in Aspen and former Kennebunkport
presidents attend their Texas-persona services.
The
victims in this type of crime are the people who invested their retirement into
the stock of these entities based on fraudulent earnings and the bottom-end
employees. Typically companies like
Enron encouraged the rise of their own stock price by giving more limited
versions of management-level stock options to their employees through
retirement benefits.
Defined
contribution retirement plans for government employees are fundamentally
insulated from market risk. They are
anti-free market. So if fraud occurs on
a government defined benefit plan’s investments, the taxpayers make up the
difference by higher required employer contribution percentages.
There
is a line between the polarization of Republicans and Democrats that has been
drawn in our political consciousness that paralyzes us to solve our own
problems because it involves a myriad-based solution that takes the heart of
helping humanity from a Democratic stance with the frugality and personal
responsibility of a Republican one, entwined with a willingness to not be a
greedy self-centered fuck focused only on the present. Synthesis is the solution.
Abraham
Lincoln was more of a libertarian Republican economically and possibly the
greatest humanitarian our country has ever seen as our nation’s leader. I like to think of myself as economically
conservative and socially liberal. Maybe
that is a dichotomy which seems like an unrealistic political animal, because I
am in the middle. I would like to think
most of America is more like
Lincoln than
like our modern politicians.
What do we do? Solutions
To
really solve our current financial problems home building in this country is
going to have to slow. People are going
to need to get out of houses we can not afford, cut non-mandatory expenses and
live with in our means. (We need to pay
for the binge bender. Somebody has to
get the toilet paper out the tree and clean the vomit out the carpet, even if
the guy who puked is deceased or in Aruba. )
We
can not have an expansion of government subsidization of providing the daily
bread of America
and reducing personal accountability for the risks we are creating to obtain
the rewards we are receiving. That is
how we got this mess.
Once
the demand for houses eventually re-increases then the mortgage market will be
able to re-stabilize with people purchasing homes and mortgages properly
correlated to their income streams.
The
other end of the Bush and Obama bailouts besides directly funding financial
intuitions is the acceleration of public works projects and the increased
hiring by public entities related to various projects. This economic theory only works if we spend
money on what we actually needed to spend money on eventually, but we are doing
it now instead of later. Based on what I
have seen from auditing the Recovery funds, the Recovery Act is a rushed Keynesian
disaster that temporarily abated fear, but did not solve fundamental flaws.
Similarly
to the time period after September eleventh, the same consequence of less
activity later that occurred in 2008 will occur again. We created a Bernard Ebbers income statement
in a check-kiting scam with our national expenditures. We are borrowing to spur tax payments and
wage growth. I do not trust in the
economic validity of such Keynesian economic packages to solve our problems if
the majority of the stimulus is spent on unwise tax cuts and pork-government
projects. Keeping specific industries
from going under, like the automotive industry, is arguably beneficial in
industries with high entry barriers.
However
in most cases of government projects this only postpones greater economic
pitfalls for short-term political expediency.
Unless the expenditures foster long-term growth in an area the
government can be exceptional over a parallel private business, which is
typically relegated to health, infrastructure, energy, education or public
safety, we should not be funding a stimulus.
The recovery acts were so hastily planned the federal government threw
money at local entities that were not even asking for the funds.
One
area that if “recovery act funds” are going to be used that would bring this
country forward is alternative energy delivery mechanisms and the modernization
of our power grid to incorporate the harvesting and transport of solar and wind
energy across America. This coordinated
with private-public partnerships to use solar to partially-supply plug-in
re-chargers in retail parking lots for electric automobiles. (Put solar panels on the top of Wal-Mart,
credit-card swipe plug-in or induction rechargers in the parking lot to refuel
our Chevy Volts and Nissan Leafs while we shop.) We are not using the recovery money for
that. The technology is also not ready. High
speed mass transit trains do not address the smart grid.
If
I was going disseminate a bailout, I would forgive government-held college debt
to Americans with degrees in targeted employable fields at a statistical
allocation based on a lottery covering all fifty states on a per capita basis
for graduates of public universities currently residing in that same
state. I would not make it based on need
or race or some other bullshit. I would
hire an independent CPA firm to administer a one time computer designed lottery
to award portions of loan forgiveness to employable people in fields that each
state chooses. This would stimulate
Generation X predominately to elevate above cycles of poverty in shit-job hells
and offer each state some level of input to compete by industry.
The
government and banks have profiteered off the fallacy of the current financed
college education for sparse jobs in over-advertised markets for America’s
everyone-gets-a-cookie dream. That shit
ain’t real, but what is real, is all the boomers wanting to be able to
retire. Well the only way that is going
to be in any way possible is to quit ignoring the future and help stimulate the
very people who are going to have to come to the boomer’s tax-rescue in 2020
and beyond. (Help us; help you, but who
wants to see interdependency in this ocean of self-focus?)
On
the employment end we need to change the way we deliver healthcare, energy, and
education in this country with digital infrastructures. These changes will infuse our work force with
the adaptable skill sets to work in revitalized industries to meet our current
expectations of service at sustainable costs to taxpayers. The retirement systems for all industries,
particularly those supported by the government, need to eliminate all forms of
defined benefit and move towards defined contribution plans to live in the
fiscal realities of the modern workforce and the post-911 stock market. This includes social security, by cutting
benefits now. But we are not using the
recover money for that either.
Mandating
the taxpayers of America
to fund government employees to enjoy defined retirement benefits based on a
percentage of their highest years of pay at ages in their mid-fifties while the
average American is struggling to ever rationalize retirement before seventy is
foolish and unjust. Defined contribution
plans are subject to market risk. The
hypocrisy is inherently biased, unfair and self-destructive.
The elimination of these contractual
obligations across our states and federal levels of government is the number
one area for saving our taxpayer dollars that is more than fair given reality
for the rest of private sector America. Not doing so
eschews the fundamental tenant of linking the fate of our government with the
fate our people that should bind our mutual motivations for our symbiotic
betterment as we progress into a common future. 2008 nuked the retirement of the majority of
401ks twice. First to destroy an
individual’s retirement; second with additional taxes to make up the investment
losses to keep the retired government employee from seeing any drop in their
guaranteed pension. How is that fair?
With
the taxpayer bailout of FNMA, we see the hypocritical behavior of why
government should not be the lender.
FNMA like the mega-banks sold principals into securitized-pieces, kept
the interest streams, and now fights offering lower rate re-finances to some
Americans and took the taxes from other Americans to stay afloat. We are in this spider web. The Federal Reserve suppresses interest
rates. The free market vomits re-finance
reduce-your-rate offers to those rates.
Banks borrow the money they lend taxpayers from the Fed. Sell the loan into financial-confetti across
the stock market. Average taxpayer debt
to equity ratio tips, loans fail, market crashes. Securities in defined benefit retirements
plummet and go under-funded.
Government
budget expected expenditures sky rocket to make up underfunding. Taxpayers get re-fi’s on our mortgages, but
not on the retirement contracts we offer to our politicians, teachers,
military, police and municipal employees.
The gap in the market is this lack of adjustment in the spider web like
the weight of a rock that tears the whole damn thing. We as taxpayers are fucking ourselves.
If
Congress could pull its tongue out of their campaign contributor’s asshole, we
could level with the average voter to explain the required annual funding curve
on the state and federal retirement systems to provide the scheduled benefits
of current governmental employees. These
plans are grossly underfunded. Not
funding them earlier and the poor investment returns have snow-balled the
required subsequent payments. Imagine a
roller coaster car ascending its rise.
At first it’s sort of level and gets steep very quickly. Well America in 2011-2012, is kind of in
the middle of that ascent. Around 2020
when everyone born in 1950 hits 70, we may fall off a cliff.
What
we would need to pay balloons our federal budget, where it may be entirely
consumed by social security, Medicaid, Medicare and interest. States budgets will be devoured by retirements
and health care. The military,
education, roads could be dwarfed based on the math of what we ignored,
over-promised and poorly designed. That
is why we need to address the promises, the planned expenditures. The debt although massive, is secondary to
the entitlement-based commitments perpetuated by our lack of honesty.
Our Giant Fuck-Pile of Debt
Do
you realize that as of February of 2008, the average working American had a
$60,100 share of our national debt? The
debt ceiling raised by the U.S. Congress under the Emergency Economic
Stabilization Act of 2008 was raised to $11,300,000,000,000. That’s trillions of dollars and around the
year 2000, that number was only around $5.6 trillion. By the end of 2012 the federal debt will be
around $16.4 trillion. That means we
have doubled it in less than a decade.
Comparatively in 1990, it was around $3.2 trillion and less than one
trillion in 1980. This was before the
2008 meltdown.
That
does not even count state debt, or the state retirement system pensions
guaranteed by the state or the guaranteed state health care or the present
value of the promised liabilities for Federal Social Security or Medicaid or
Medicare because only the portions due in the current period for those federal liabilities or on the Federal
government’s balance sheet.
Most
of our historical debt has been used to finance our wars, but it is
increasingly being created to finance our entitlement systems and government
sponsored retirement and healthcare systems of social security, Medicare and
Medicaid to make current payments. As
our population ages this debt will become a bigger and bigger problem and will
probably exceed our Gross Domestic Product as a nation by 2025.
Generation
X and the Boomers need to unite on this or we will perish together, but we will
probably just try to fuck each other over in an inevitable war. (Go get your pitchforks. Frankenstein and his bride need hip
replacements.)
This
is a glaring indicator that the current system is not in any way sustainable or
salvageable. We are requiring ourselves
as a federal government to spend more money than we make and spiral ourselves
towards an economic apocalypse.
While
it is true that most of our debt is held by domestic sources that does not mean
that we should not be greatly concerned with the impact of our foreign debt
holders. Around 2010, approximately
twenty-eight percent of our total debt was directly owed to foreign governments
and approximately forty-four percent of the debt owned by the public was
estimated to be held by foreign nations according to federal budgets. Among foreign nations China held about twenty-four percent and Japan
held about twenty-one percent of all foreign held debt. Again the debt is bad, but not the core
problem, the entitlement promises under poor systems.
Millions
of people are already hopelessly doomed on social security’s failures we are
just too afraid to look in our attic for the corpse. The government is compounding the failure by
trying to weasel around this inevitability, because politically anyone who
calls the emperor naked will probably get blamed for the problems and burned at
the stake by their party.
We
need to be honest and accept the hit, political fallout, and adjust or
Generation X is going to have to pay for our parents to retire and then save
for our own retirement on the side. That
misguided hope is a pipe bomb inside a pipedream. This dynamic creates cross-generational
political war. Those with more years and
a higher escalation of commitment into social security will try to save
it. The younger generation is going to
try to get rid of social security as soon as possible.
Government
employees have opted out of social security for years into their own retirement
plans for the police and the firemen and the municipal employees, the registrar
of voters. The government treats paying
F.I.C.A. taxes as a privileged benefit.
You name it government employees have their own retirement system and
have a better match than a private job because it is the taxpayer’s money.
Government
employees can retire in their mid-fifties and have guaranteed benefits. Ask to see your governmentally employed
friend’s paycheck and see if they pay FICA tax.
They probably pay Medicare, but not FICA if they are in a state
retirement plan. That’s kind of like the
captain of the Titanic piloting his own rowboat while the ocean liner barrels
for the iceberg.
Government
employee’s retirement sounds like a wet-dream retirement compared to, “Oh, my
private employer matches two-percent of what I put in and I am at risk in the
market and I get what I get.” Some
government employees have ten to fifteen percent employer contributions. I have seen as high as twenty-eight. In some cases when the market return on what
the plan invested in declines, the taxpayer (employer) portion of the match
mandatorily increases to make up the difference, without an increase on the
employee so that the defined “promised” benefit on the backend is closer to
being actuarially sound. Who knows if it
is, but at least the taxpayers put in their fair share at twenty-something percent. (I heard the Louisiana systems are only around 54 percent
funded as of 2011.)
The
government is great at promising our tax money to its own employees in
retirement plans. Government employees
are living in an archaic dream world that ended in the private sector years
ago. The economic realities of America
do not allow for the old rules for us.
Since the American taxpayers do not really focus in on what is really
going on we do not scream out how unfair the imbalance is. Maybe occupiers will eventually notice. We never connect how our tax dollars absolve
government employees of the market risk the average American goes to sleep
worrying about in our 401k’s.
Work
until you’re dead unless you can get a government job. Fuck that.
Conservatives bitch in this country about assisting the poor with hand
outs. Liberals bitch about assisting
corporations with tax-incentive welfare.
Well we should all bitch about government employee entitlement to a
defined benefit retirement. Yes, there
should be retirement plans, but IRA’s and 401k’s, not special treatment at the
disproportional detriment of America.
Governments
can enter into 403b retirement plans much like 401k’s, but invested in
governmental securities, that put the market risk back on the employee rather
than the government, but most of government entities do not because
governmental entities have an inverse dynamic than every other private
employer. Governmental entities want to
have more expenses so they can tax us more and grow their own budgets. The governmental employees forced to utilize
these plans are often on the fringe in some smaller governmental entity not
directly connected to a bigger group such as the municipal, police, fire or
teachers.
Changing Government Budgeting
Governmental
entities have no incentive to decrease in size or limit employee benefits. The number one reason governments are
encouraged to grow is the budgeting and appropriations process funneling up
from the taxpayers to the federal and down to the state and local levels. Higher levels of government budget lower
levels of government more money for spending more money. This budgeting dynamic goes against our
capitalist system. How can we change or
tolerate this? (Who wants the three extra boxes of donuts we ordered, just in
case somebody wanted sprinkles with pink icing and lemon cream? Oh, well junk ‘em in the dumpster. )
How
many citizens a governmental entity serves on how efficiently it serves those
citizens should be the determining factor in how much tax money the American
people will entrust to an entity within one fiscal period and how much that
entity will be allowed to receive to budget for in the subsequent period. If a governmental entity is overspending with
a ten million dollar budget, why should we give the entity a fifteen million
dollar budget to break even with? In the
private sector companies like that go out of business, unless I guess if you
get a bailout from the American taxpayers.
Think
about it like this, what makes a school district, a fire district, police
department, a water, gas or sewer district, different depending on where it is
located? Most of the issues involved
relate to being in a general urban, suburban, or rural area and the number of
people. Big-Data Statistics and actual
need should determine funding. Most
funding comes from ad valorem taxes on property, incomes taxes, or sales
taxes. Local citizens can and do vote to
raise their own local taxes and there is a huge argument that most taxes should
stay local, but the fact is there are an overwhelming number of examples where
revenue is redistributed through state and federal levels. The other major part is if the districts
operated more efficiently the local taxes could go down, but that is just
pie-the-sky ludicrous thinking for lunatics writing novels and blogs.
One
of the primary reasons tax decreases do not occur is that well-funded districts
subsidize districts with low tax revenues through state and federal level
re-allocations. Those reallocations are
frequently based on political negotiations and power struggles on legislative
floors not on statistical analysis and mathematical databases and functions
that any private corporation handling billions and billions of dollars would
spend countless hours of research in order to perfect to ensure an effective
and efficient use of its resources. So
why given the advances in technology do we still use the same methods of
political gamesmanship that have gone on for a couple of centuries?
With
a digital IRS-centered census system based
on annual or possibly monthly rather than decade to decade updates based on tax
reporting we could obtain citizen data.
All we have to do is develop
universal urban, suburban and rural utility billing software that integrates with
the IRS.
Every
home that pays for water, gas, or sewer in the United States should have tagged
data by social security numbers for inhabitants. Those social security numbers would be tied
to zip codes on active bills. Another
piece could come in from school enrollment with its own software. Another piece could come in from medical care
with its own software. The computational
power of computers will eventually make cross referencing all this data
feasible to correlate across all these systems in a cloud environment. The benefit is when we use the power of
knowing where people live to meet and fund governmental products based on math
and not lobbied for political rhetoric.
It won’t be perfect, but it is a base.
The
rural utility billing systems I work with now are horrendous. The utility billing systems are designed by
private software companies patching a software solution for primarily a
governmental industry that may be twenty-years-old and cost the utility thirty
to fifty grand to try to replace or patch.
Just
as in education. A wise use of tax dollars would be for the federal government to fund
the unique universal design of every software used by a governmental utility,
police department, emergency communications district (911), fire department,
hospital, classroom, municipal office, department of motor vehicles, etc. to
function in an integrated cloud environment. The government should invest in hiring the
best software developers in America
to design proprietary software that can be used for years by every local
district in America. Updating and managing the software will be
less expensive if cross-industry cohesion is planned in the front end. We need to start designing now.
This
will prevent the local entities from having thousands of different software
systems. This will provide boundless
possibilities for cohesion. This will
save millions of dollars by not having to pay software licensing fees and local
level updates. Private businesses do not
use these types of software so trying to patch a private entity designed
application on top of a governmental structure is incongruent.
States
can come up with annually updated per-capita state-wide funding ratios for each
section of urban, suburban, and rural governmental entities. Entities will finally be encouraged to
conserve their resources rather than rush to expend all unused resources on
whatever they can come up with before their budget years end to ensure their
funding does not get cut. This will both
simplify the politics of funding and provide local entities with more autonomy
for fiscal management in a framework that encourages prudent accounting.
Good
governments can manage people and resources to get through tough times without
fear of getting their funding cut between budget periods because expenses went
down. Governments that consistently
overspend to provide the services to the same population in size and
geographical type as counterpart organizations in their states should be forced
to make tough decisions. We can plan
allowances for urban versus rural factors in per-capita allocation rates based
on the fixed costs of operating a system in a low versus high population
density location. We will have fifty
states worth of data to analyze and compare for reasonable standards. This data can help isolated citizens in
governmental leadership roles to connect with counterparts in other states for
beneficial and efficient fiscal and administrative management ideas. Cost allowances for natural geography such as
wetlands, mountains, lakes, rivers could also be considered.
This
may finally stop the dynamic of governmental and nonprofit entities maxing out
budgets prior to their year end.
Entities across the board spend taxpayer money on shit the entity does
not even need, just so their budget does not get cut and the state does not
pull back the available funds listed on some budget line item. I have seen this in almost every single
entity I audit in almost every single year.
Laptops, office supplies, vehicles, bonuses, pay increases, coffee,
travel labeled as “training”: I see it boom to fill a budget. The practice is pandemic and at the core of
explaining our national deficit.
Facing Reality
We
can not live in a dream-world where we can keep throwing our money at dysfunction
and expect the dysfunction to correct broken systems by making it easier to
facilitate the inefficient choices that got the entities the funding in the
first place. As a CPA and an auditor I
can not stop it. I can not even point
the wasteful shit out in a report, because it is all legal. I am no defense. I am just another false sense of security
thrown like a blanket over the American parakeets.
I
can not question why a local district pays two hundred dollars a month for
Direct TV rather than a digital antenna once.
Why should board members at one of my clients drive separately, charge
mileage and stay at different hotels for a conference in Vegas every year? Why do they have two thousand dollar a year
coffee services for a rural water district?
Why do they each need a vehicle?
I
am powerless to help as an auditor.
Don’t even start on nepotism and over-priced contracts and the flaws of
the public bid process. I have no GASB
standard ratio to disclose to inform the public how wasteful or how prudent an
entity really is. Help me, help us.
(CAFR’s is voluntary and is better presented in bottom line comparison ratios
to similar entities on a national basis.)
We
can not continue to allow politicians to solve every challenge in our
government by asking for more money and using threats to cut education and
healthcare to validate a politically-expedient tired argument through
base-level intimidation. Politicians
should have to use statistically-comparative data to show their costs per-user
statistics are actually feasible to allocate additional taxpayer
investment. Low revenue is usually not
the problem. Facts and math should be
used over fear and rhetoric. Who wants
to hear algebra when the Republicans and Democrats can tell us boogie-man stories? Our systems should allow the data to allocate
budgets for us rather than listening to the politicians at all.
There
are balanced budget amendments and state laws to budget resources, but
ultimately most state agencies just amend budgets through unanimous votes of
governing boards to make the lines items in amended budgets co-inside with the
reality of whatever the district or organization ended up spending a few weeks
before the fiscal year end. For a large part
a budget is a formality except that the total revenues and total expenditures
are supposed to be within five-percent and the ending fund balance or net
assets can not be negative in a governmental fund without a slap on the wrist
finding in the back of a report. The
finding really does not do jack shit.
CPA’s have no real power. We
audit a report. It simply goes into the
oblivion of the internet and the entity moves forward.
This
sort of per-user computed budgeting system may not have been possible in the
past without the technological advancements that allow the average citizen to
be potentially connected to their government on a daily to weekly basis, but
the paradigm has changed and consequences of us not adapting to that shift are
commensurately more costly as the issues of education, healthcare, retirement,
and interest expenses balloon to a level that could devour all the resources
for the other general and required functions of our government.
We
can implement per-user, per-mile, per-pound statistics attached to funding
ratios in the areas of education, utilities, healthcare, transportation,
agriculture. This is infinitely more
productive than “my expenses went up so I better ask for more money.” Let us reward efficient systems in government
that have lower than average cost per-user statistics by giving them more of
the excess state and federal funds to expand their systems or by cutting taxes
in the first place to never have the excess funds in the system.
If auditors could monitor entities under
federally-established ratios that could in turn reduce an entities funding, the
very threat of that would instill vigorous self-monitoring by entities
nationwide to abide with cost standards. We could recognize rather than
ignore the zero sum game of budgeting based on limited taxpayer dollars. All the little fiefdoms would start giving a
shit about debt; instead of abdicating it to a black hole we call the federal
deficit. Our threats of concern for our deficit
would turn from empty into that of the concerned parent and be flush with
consequence in every local government in America.
Ending Subsistence Based Rewards
We
need to give local leaders autonomy to get rid of wasteful employees in the
system and replace them through a legal means that does not bring about labor
lawsuits against our government.
However, governments will never make these hard decisions unless we
force them to through changes in budgeting laws. Our government is bankrupt. We just don’t use the word. Bankrupt companies are allowed to break
contracts.
We
need full employment at will, not tenure at thirty and retirement at
fifty-five. If we are at such high
unemployment in this country, why do we need such generous tenure and
longevity-based benefit packages to attract and retain qualified employees to
governmental labor markets?
We
need to get rid of the largest deterrent to motivated people from working for
the government. That deterrent rewards
subsistence rather than excellence, who you know over what you can do, because
there is often no measure or way to measure excellence in the system, by its
inherent nature or design. We should pay
governmental employees on the front-end and “if you do not like it quit.”
There
should not be mandatory pay rate increases, but locally determined wage
increases under the discretion of the governing boards of the local entities of
this country that coincide with those boards responsibility to maintain the
budget of that entity in a responsible manner.
Many boards do operate this way.
Some end up being more generous than CPI index increases. (Many non-government employees have not
gotten a raise for years. How do
government’s compare?)
As
a rule, without warranted production correlations with employee experience, it
is better for a worker to maintain a valued win-win consistent wage with an
employer after a threshold of a learning curve has been traveled. Entwined with this is that at the end of
employment, wages should either decline or an employee should risk termination. This doesn’t happen in Government America due
to lack of established criteria. In
private America
top-heavy loafs get fired or they stay and mid-level and bottom-end employees
are perpetually underpaid to finance the corpulent old-timers.
There
are no profits going to traditional stockholders in government, only results of
services to the American taxpayer. Cost
per-user is a great measure of function.
Governments like non profits have
an inverse operational motivational dynamic than for profit entities. For profit entities increase product quality
in order to increase sales and reduce the expenses to create that product to
increase return to their investors and elevate the stock value. In government the American taxpayers are the
stock holders. What we say should matter
the most rather than the least. The
return on our investment is us getting a quality service and the government
using the least amount of our tax dollars to accomplish that service.
What
our government does now is to throw more money at problems and blame corrupt,
inefficient and ineffective systems on why the money did not do any good. Our leaders ask for more of our money for the
same system. When election time comes
politicians repeat the cycle. The reason
for the flawed system lies in the accounting.
Who allows this?
Planetary
administrative overheads get hidden because no one quantifies the costs. Simple changes in GASB (Government Accounting
Standards Board) regulations to mandate disclosures across districts and
municipal entities could work in some governmental arenas if the government led
the change. Not all sectors could adapt,
but education, healthcare, transportation, utilities and energy could. The areas of security and emergency
management probably would not, because security is a collective good. These standards will only be feasible to
comply with if the software is changed to efficiently and effectively provide
the census data to the federal, state and private auditors to complete the
disclosures.
Medicaid,
Social Security, Medicare and the giant snowballing avalanche of interest on
our national debt is growing faster than the working tax-paying population to
sustain it. These four items are set to
consume our entire federal budget in less than two decades.
If
government employees can circumvent social security why are we mandated to
participate in social security? How many
people in America
would take the same option the government employees do and opt to not pay FICA
tax for declining participation in social security? Would any one under forty still
participate? Generation X would form a
picket line.
Why
if government employees often have fully-funded healthcare by their employer,
why does privately-employed working America have to struggle to find
healthcare? Why do governmental accounting
systems incentivize spending more without any measure of accomplishment for the
dollars utilized?
The
answers are all the same, because we allow it, because we do not demand a
change, because the average person asks these same questions at their dinner
table and feels alienated because America is about addressing the
extremes, not the core. The extremes
nominate our partisan candidates.
The
average tax-paying American is taken for granted because we do not have our own
lobbyists or the desire to be partisan.
We are not organized as special interest groups and have too much
personal pride to ask for hand outs.
Lobbyist
and special interest groups got so mighty because we gave them the power to
swing elections. Lax campaign finance
laws with the same cronies play puppeteer with political action committees like
Move On.org and The Chamber. The NRA,
the Sierra Club, ExxonMobil PAC, Dominion Resources PAC, Goldman Sachs PAC,
Citigroup, Inc. PAC, Tito PAC, Pfizer Inc. PAC, the AMA PAC, Ernst and Young,
PAC, Tyson Foods PAC, Comcast Corporation PAC, McDonald’s Corporation PAC,
K&L Gates PAC, Wal-Mart Stores PAC for Responsible Government, RJ Reynolds
PAC, IBEW PAC, and you name it there is a political action committee for it. Now we have cluster fuck Super PACs, just
watch 2012. This is our true legislative
body of representatives with less than half a percent of the people driving
ninety-nine percent of Congress.
Legislators spend half their time focused on this slice that funds their
campaigns. Play-ball fundraising equals
access. The root is money.
We
thought the American way was to go to work and earn a living, live by a set of
morals and justice would prevail. That
is not what is happening, because we have allowed ourselves to leverage the working
power of the middle-class of America
to cultivate a culture of helplessness to galvanize a voting block on the
bottom-end of the income range and to condense the majority of wealth in America
into less than ten-percent of the population on the top-end. While it is true that the top ten-percent of America
pays over half of the income taxes in our country, most of the wealth created
to fund the income earned in the first place is through the consumer spending
of the average American.
The
take-home pay of the average American has been significantly devalued since we
have to spend so much of our money on health insurance premiums that deny us
coverage and tax dollars to fund a public education system that fails to
prepare too many of us for the real American working environment. At that same time that educational system
leaves too many people exiting its hallways with no better deemed career path
except for crime headed for our revolving-door prison systems focused on
vengeance rather than rehabilitation that costs us billions.
Usury Laws
Usury
laws go back to biblical times. Most of
the world’s religions have historically considered charging our fellow man an
excessive rate of interest for borrowing money a serious sin. In America we have allowed credit card
companies to facilitate an immediate gratification culture to buy now and pay
five times more in twenty-three easy payments later. We are a nation of contracts with fine print
booming profits for the super-sized financial services sector of the economy,
which creates nothing.
Credit
cards and short-term finance companies earn money and produce a chasm. We have pay-day loans with five-hundred
percent interest rates. We have H&R
block and Jackson Hewitt bartering advanced federal income tax refunds into two
and three hundred percent interest rate short-term loans basically guaranteed
by the federal government. These “Cash
Cow”, “Money Now” leased space help low income American’s check into cash
companies have proliferated like roaches in every poor neighborhood in America
profiteering off taxpayers.
The
Federal Government passed the Credit Card Accountability and Disclosure Act in
2009, to help provide better disclosure in credit card interest rates. Federal income tax refund loans should be
illegal and maximum effective interest rates be established on payday
loans. Credit card companies and banks
should be able to charge whatever someone agrees to in order to create a
flexible financial market, but interest rates and loan covenants should be
written in plain English.
The
most damaging part of these short-term “loan” financial services companies is
that they perpetuate poverty and prey on the weakest members of our society
profiteering off the generosity of taxpayers.
Where do we draw the line between right and wrong of letting people
decide for themselves and saving people from their own self-destruction? This comes back to those lines of
governmental intervention in a free market economy and I think on this one we
should look at historical views of usury laws and take some steps back as a
country to tighten our roles on what we allow ourselves to charge our fellow
man.
From
a fiscal reality dollars in those loans are often created through the earned
income credit which is other tax-paying Americans funding a desired economic
support of low-wage earners. The H&R
Block’s of the world are acting like Somali warlords hijacking United Nations
food caravans. The intended consequence
of our help is sabotaged by greed.
Interconnections
Did
America ever think that
maybe “made in America”
might come back if we solved the healthcare and retirement crisis in this
country? If we could quit fueling China’s
economy in this regard we could support our own? If we could change our energy infrastructure
we could reduce our reliance on the countries of OPEC, Canada, and other foreign nations
for our energy supply.
If
we could meet these needs than our national debt may be curable. To emphasize the significance of our national
debt in the lives of the average American to our representatives, we need to
demand change in budgeting laws, we need to call for the end of social security
or at minimum to allow each American the opportunity to opt out of the social
security system, and we need to focus on a massive reduction in our spending at
every level of government to eat away at rather than grow our national debt to
re-establish our economy at the forefront of global rankings.
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