We can blame ourselves for fiscal insanity

By Jim Thompson
HCP columnist

On Jan. 17, the Government Accountability Office (GAO) released its financial audit titled, "U.S. Government's Fiscal Years 2012 and 2011 Consolidated Financial Statements."

You can read it at gao.gov.

In the opening summary, the GAO remarked in several places that the federal government and the Department of Defense do a fairly poor job of following generally accepted accounting practices.

In many places, the records and financial controls are so poor the GAO was unable to express opinions on the financial statements. Along this line, the summary states: "Material weaknesses resulted in ineffective internal control over financial reporting for fiscal year 2012."

In the business world, this would likely result in the firing of the CFO, if not the CEO and the some of the board members.

The report is quite dismal as it looks at financial controls and the financial path forward for the country. On page five of the cover letter of the report, it states (last full paragraph on that page): "Over the long term, the structural imbalance between spending and revenue will lead to continued growth of debt held by the public as a share of GDP; this means the current structure of the federal budget is unsustainable."

I would encourage you to look through the report yourself.

As our government's finances are currently structured, the report says the debt to GDP ratio will rise to 145 percent by 2042 and 395 percent by 2087 (this ratio is currently 73 percent).

By comparison, the Greek debt to GDP ratio at the start of its crisis in 2011 was 170.6 percent.

The GAO report states that it is quite urgent that the U.S. federal government quickly reverse its current fiscal path to avoid the debt to GDP ratio from getting out of hand: "It is estimated that preventing the debt-to-GDP ratio from rising over the next 75 years would require some combination of expenditure reductions and revenue increases that amount, on average, to 2.7 percent of GDP over each of the next 75 years. The timing of changes to non-interest spending and receipts that close this '75-year fiscal gap' has important implications for the well-being of future generations. For example, relative to a policy that begins immediately, it is estimated that the magnitude of reforms necessary to close the 75-year fiscal gap increases by nearly 20 percent if action is delayed by 10-years and for more than 50 percent if action is delayed 20 years."

In layman's language, the longer we wait to address this problem, the worse it will be.

These are serious problems. What did the president say about these matters in his second inaugural address on Jan. 21?

Here is what I could find: "For we, the people, understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it. We believe that America’s prosperity must rest upon the broad shoulders of a rising middle class...We understand that outworn programs are inadequate to the needs of our time.

"So we must harness new ideas and technology to remake our government, revamp our tax code, reform our schools, and empower our citizens with the skills they need to work harder, learn more, reach higher. But while the means will change, our purpose endures: a nation that rewards the effort and determination of every single American...We, the people, still believe that every citizen deserves a basic measure of security and dignity. We must make the hard choices to reduce the cost of health care and the size of our deficit. But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future."

Does that last sentence mean that "caring" and "investing" trump sound fiscal policy? If you read the entire inaugural address, you will discover – if you have not already figured out – that President Obama is clearly a left-wing ideologue.

In fact, just after the speech, pundits on the left and right were almost unanimous in this assessment, e.g., that he is a left-wing ideologue – the left with a smile on its face and the right through eyes filled with fear.

In the end, however, the country's financial condition marches on, day after day. And as a nation, we have a choice: Do we want to selfishly continue to grab all we can, future generations be damned, or do we want to be remembered as the generation that set the country on a sound fiscal path?

There are some more numbers that I will leave you with as you ponder these matters.

From the GAO report, expenditures in 2012: 23 percent were by the Department of Health and Human Services, 22 percent by the Social Security Administration, 21 percent by the Department of Defense.

According to CBS, the unemployment rate was the same on the day Obama took his first oath of office and on his second: 7.8 percent.

According to the New York Times, median household income is $50,054, 8 percent below what it was in 2007.

Clearly the country and its citizens are not on a sound fiscal path.

Our issues are not partisan. They are not Republican or Democrat. In fact, I have given up on both parties and refuse any longer to be associated with either – they are both the same.

The issues are what we the American people want. After all, we elected all the characters in Washington today. Blaming no one but ourselves, the voters, and then taking responsible, unselfish actions are the only ways to solve these serious problems.

Jim Thompson, formerly of Marshall, is a graduate of Hillsboro High School and the University of Cincinnati. He resides in Duluth, Ga., following decades of wandering the world, and is a columnist for The Highland County Press.