"State of the Union" Absurdities
Jan 22, 2015
As posted on www.usaponzi.com
After listening to the "State of the Union" speech Jan 20, 2015 and the Republican response the next morning, I cannot keep from commenting further about the continuing fiscal irresponsibility of the U.S. Government. The U.S. Government acts as if they have an unlimited source of revenue and in fact does not even use an accounting system that accurately assesses the affordability of their current year spending and their future year commitments. As you might guess, these concerns relate to the fiscal policy of the U.S. Government that has created a massive ($100 Trillion) Ponzi scheme which I have named USAPonzi. The U.S. Government fiscal policy has created $18 Trillion of Debt and $82 Trillion of Unfunded Liabilities and yet both sides of the aisle refuse to propose any truly constructive policy changes that would move toward an equitable and sustainable fiscal policy.
President Obama says we are better off today than we were when he took office.
Jan 2009 Jan 2015 Chg %Chg
GDP $14.0T $17.0T $3.0T 21%
Dow Jones Average 7,949 17,554 9,605 121%
Unemployment Rate 8.0% 5.6% -2.4% -30%
Number of people working 134.0M 140.6M 6.6M 5%
Cash Deficit $1.4T $0.5T $0.9T -66%
GAAP Deficit $4.3T $6.5T $2.2T 51%
Debt $10.6T $18.1T $7.5T 71%
Unfunded Liabilities $56.3T $82.1T $25.8T 46%
GAAP Obligation $66.9T $100.2T $33.3T 50%
Private Net Worth $79.8T $111.1T $31.3T 40%
The financial numbers that President Obama quoted in the "State of the Union" speech do show that the economy looks much better; GDP is up about 21%, the Dow Jones Average is up 121%, unemployment is down, the number of people working is up, and the Cash Deficit is down by two thirds.
What he did not show is that to achieve this apparent improved performance of the economy, the U.S. Government took on new debt of $7.5 Trillion and new Unfunded Liabilities of $25.8 Trillion for what is now a total GAAP Obligation (virtual debt) of $100.2 Trillion, increasing our total financial commitments by 50% since he took office. The U.S. Government assumed new public sector virtual debt (GAAP Obligation) of $33.3 Trillion which caused the private sector Net Worth to increase by $31.3 Trillion. If the U.S. taxpayers do not have to pay for the outlandish spending and promising of the U.S. Government they can appear to be very rich.
It is absurd to say that we are in a better place today; it just looks that way to the UPPER CLASS because the stock market is up and U.S. private net worth is up because we borrowed $33.3 Trillion more from the future U.S. taxpayer over the last 6 years.
It is absurd to claim that things are getting better because our Cash Deficit is down by two thirds when our "real" GAAP Deficit is up by one half.
President Obama proposed that we increase social benefits that would include offering free college education for qualifying students, subsidizing child care, and providing lower mortgage insurance premiums.
When you are in debt on a Cash basis by $18.1 Trillion, in virtual debt on a GAAP basis (GAAP Obligation) by $100.2 Trillion, have a Cash Deficit of $0.5 Trillion, and have a GAAP Deficit of $6.5 Trillion; it is absurd to be thinking about how you can spend more money.
President Obama proposed that we increase taxes on the wealthy to give tax breaks to the middle class and the Republicans responded that they will not support any tax increases.
We will have to raise more taxes but we must first lower spending and dramatically lower the social benefit promises. This will cause dramatic trauma in our economy and in our society but it is a mathematical truth that we must accept. We can't keep pushing our liabilities forward to the future U.S. taxpayer. Dramatically raising taxes on the wealthy U.S. citizens and businesses will be required to achieve an equitable and sustainable fiscal policy, but doing so just to lower the taxes on the middle class does nothing to close our fiscal gap. It is absurd to be lowering taxes on anyone until we take actions to lower spending and promising.
The financial crisis of 2008 is not over because we did not fix the root cause. The U.S. citizenry must demand that the U.S. Government adopt GAAP Accounting and commit to a balanced GAAP basis budget in order to establish an equitable and sustainable fiscal policy for the Government of the United States of America.
See www.usaponzi.com for more information about this Ponzi scheme.