It’s appropriations time in Washington, DC. Both parties promise tax cuts. The Republican Convention, for its “Make America Wealthy” night, discussed inflation, jobs, immigration, and tax cuts. Not one prominent speaker addressed the $35 trillion national debt and the projected 2024 federal deficit of $1.9 trillion. It’s a certainty the Democrat Convention will not address the national debt. History is replete with examples of how a massive national debt destroys a nation’s economy and renders the country a second-class state. To break this political silence, I must rhetorically ask – How broke is the federal government? Well, it’s penniless!
The federal government is constantly out of money and always needs more. It resembles the cartoon character “Wimpy,” a friend of Popeye. Wimpy is a mooch and scam artist. He was always out of cash, but his voracious appetite for hamburgers forced him to ask all – “I’ll gladly pay you Tuesday for a hamburger today.” The federal government constantly asks taxpayers, “I’ll gladly properly manage your money on Tuesday for more taxpayer money today.” The proper management of taxpayer monies never happens; only more promises from our politicians to reform their government mismanagement.
The federal government is very blase about its $35 trillion national debt, and Congress uses its annual budget games to hide unnecessary expenditures in the proverbial weeds. The federal government’s budget is a camouflage to hide its financial condition – it is de facto bankrupt. Its adversaries and the BRICS (Brazil, Russia, India, China, and South Africa) understand the federal government’s financial stress more than American politicians. The BRICS are attempting to create a competing reserve currency and eventually replace the dollar as the world’s reserve currency. If this ever happens, the U.S. will rapidly sink into second-class status.
Since 2000, the dollar has declined in use and acceptance as the world’s reserve currency from 71% to 60%. The more the federal government uses the dollar to punish foreign adversaries for policies the U.S. dislikes, the more nations seek to displace the dollar to protect their own currencies.
It’s now time for American citizens to focus on this financial disaster facing this nation before it drifts into a financial crisis our government cannot easily fix. The BRICS know the U.S. lives on borrowed time, sustained only by its printing press and a large supply of paper and ink.
A book exposing the perils of the federal government’s fiscal health is written annually but rarely read. If the federal government and Congress won’t read it, it is time for citizens to read it and start taking control of their country.
The book is titled “The Financial Report of the United States Government” or the “Financial Report.” While federal government agencies prepare their chapters, the significant aspect of the report is that the composite report is audited by the General Accounting Office (“GAO”), an independent arm of Congress. It is not a regurgitation of the budget, focusing on deficits, surpluses, and debt. The Financial Report focuses on the government’s net operating costs, i.e., the differences between real revenues and real costs.
How broke is the federal government? In its latest report (2022), the gross cost of the federal government was $ 7.4 trillion. While it collected $4.9 trillion in taxes, the actual net cost of government is $9.1 trillion since it must recognize an additional future expense of $2.2 trillion, which it incurred by underestimating the cost of employee and veterans’ benefits. Fortunately for the federal government, since it will not have to pay the employee and veterans benefits immediately, accounting standards allow it to show a deficit of only $1.37 trillion for 2022.
What is the value of all the federal government assets? On the asset side of the ledger, the federal government has only $4.962 trillion in assets. This amount consists of $878 billion in cash, inventory valued at $407 billion, and $1.2 trillion in property, plant, and equipment. Its largest asset is “Loan Receivable, Net,” valued at $1.434 trillion. Of that amount, $1.3 trillion is the Federal Student Loan program that President Biden wants to forgive, an act that would immediately reduce federal assets to $3.62 trillion.
What is the bottom line? After GAO makes all adjustments, total federal assets are $5 trillion, and total liabilities are $40 trillion. The federal government is in the hole for $35 trillion. Moreover, the GAO report does not consider, for audit purposes, any unfunded liabilities for Social Security and Medicare, which are estimated at $76 trillion.
If most families live paycheck to paycheck, the federal government lives from every withholding tax payment to the next. If the average American family has difficulty paying the bills, they should be terrified that for every U.S. citizen, including infants, their share of the national debt is $100,000. For families, their share is over $250,000. At some point, Mr. and Mrs. America and the kids must realize the government is penniless. It is borrowing from our children so it can gorge itself today. The federal government, like Wimpy, is a “deadbeat,” a person or entity “that is not willing to pay debts or accept responsibility.”
Every time the federal government takes money out of a paycheck for its wastefulness, it tells the taxpayer, “I’ll gladly pay you on Tuesday for your hard-earned money today.”
William L. Kovacs, author of Devolution of Power: Rolling Back the Federal State to Preserve the Republic. The book received 5 stars from Readers’ Favorite. His previous book, Reform the Kakistocracy, received the 2021 Independent Press Award for Political/Social Change. He served as senior vice president for the U.S. Chamber of Commerce and chief counsel to a congressional committee. He can be contacted at wlk@ReformTheKakistocracy.com