They made a desert and called it peace...

"From this date I date the ruin of all my fortunes."
--George Washington

"The truth is an offense, but not a sin"
--Bob Marley


The United States is a corporation, which is one in the same as "government." Our purpose is to expose this and other corrupted facts. We believe in the Common Law, in the people's judiciary, in the municipalities' sovereignty over the Federal Departments, and in the individual's sovereignty above all other powers over Earth and under God. No rule of law has meaning. Rule of Precedent IS Law.

fellow bloggers who follow Thus Always To Tyrants

Thursday, September 27, 2007

The United States Corporation: Inside the Numbers, part 1

The United States Corporation: Inside the Numbers, part 1, by FranG

(see references at the end of part 2)

General Overview

With the recent talks of the dollar's strength diminishing against key currencies worldwide by the likes of people like Alan Greenspan, the housing market fiasco, billion dollar put options investments, the raising of the debt shield, as well as the verbal economic war with China and it's potential use of the "nuclear option" against the U.S., I decided to personally dig through the financial statements of the United States Government/Corporation, as of fiscal year ending September 2006, and see first hand just how bad things have really gotten.
I must say, being an accountant and former auditor, upon looking at the financials my face literally cringed. This is a classic case of a company well into the stages of financial distress. We are not becoming stressed, we're already stressed and have been for some time now. Any logical company will not do business with a company in distress as they can be foreclosed on at any time by their creditors. The largest creditor nations of the United States are 1) Japan at about $612 billion, and 2) China with about $420 billion 1. These two countries alone own 20% of the total U.S. debt.

I observed something rather peculiar when combing through the financials. I noticed that the United States has received a disclaimer opinion on its financial statements for the tenth straight year from it's auditor, the Government Accountability Office (GAO). For those that don't know, a disclaimed opinion equals no opinion. When an auditor disclaims an opinion, they are saying that not enough information is available to them to rule either favorably, or unfavorably on the financial statements. As an investor, would you invest in a company whose auditors have not issued an opinion on it's financial condition in 10 years? Well, ironically, U.S. Treasury Bills are considered a risk free investment and, as a result, have the lowest yield of any investment in the U.S. stock market. An illustrated summary of the financial health of the government is listed below:

The Cost Centers

The United States government has hundreds of departments and agencies but we will focus our attention on the major departments. The five largest cost centers for the U.S. Government are 1) the Department of Defense, 2) the Department of Health and Human Services, 3) Social Security Administration, 4) interest on Treasury Securities Held by the Public, and 5) the Department of Veteran Affairs. These cost centers account for $2.2 trillion, or just over 75% of the total operating costs for the year; with the top 3 comprising about 20% each of the total costs... It's interesting to note that the interest owed on treasury securities increased by over 20% of the amount for fiscal year 2005, because interest is a derivative of an underlying debt instrument. This means that the national debt has increased as well (more on the national debt later). The Department of Veteran Affairs, on the other hand, experienced a decline of nearly 60% in it's costs from the 2005 level. It appears veterans have suffered a decline in the amounts of benefits and service it receives from the government as a direct result of interest obligations to outside parties.

If we include the top 10 cost centers for the United States, we have a total cost of operations of $2.6 trillion, or just under 90% of the $2.9 trillion dollar total. Of the seemingly infinite depth of the arms of the government, a mere ten of them absorbs nearly all of the costs. The bottom half of the ten cost centers are 6) the Department of Agriculture, 7) the Department of Education, 8 ) the Department of the Treasury, 9) the Department of Transportation, and 10) the Department of Energy. The overall amount of expenditures for 2006 by all government departments and agencies was $2.9 trillion.

About the Departments (i.e., Cost Centers)

For all intents and purposes, the U.S. provides its citizens and nationals, as well as state nationals (state citizens but non-U.S. citizens) 2 with the service of defense from foreign invasion and internal insurrection, the promotion of health and general welfare, and economic security. The question is: are we getting our money's worth? Let's look at each in detail, particularly the mission statement from their websites:

Department of Defense (DOD)

"With our military units tracing their roots to pre-Revolutionary times, you might say that we are America’s oldest company. And if you look at us in business terms, many would say we are not only America’s largest company, but its busiest and most successful." "With over 1.3 million men and women on active duty, and 669,281 civilian personnel, we are the nation's largest employer. Another 1.1 million serve in the National Guard and Reserve forces. About 2 million military retirees and their family members receive benefits." 3

So have they succeeded? Well they were successful in allowing the most deadly attack of terrorism in the world's history to take place on their soil about six years ago... This happened despite the U.S. accounting for 43% of the world's military spending. China and Russia are a distant second, accounting for only 6% each. 4 But is this a good thing, having the toughest military in the world? Not according to James Madison, the country's fourth President, founding father and chief architect of the U.S. Constitution for the United States of America. According to Madison:

"Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes … known instruments for bringing the many under the domination of the few.… No nation could preserve its freedom in the midst of continual warfare."

Unfortunately, the U.S. is not taking heed to the wisdom of Madison's words as illustrated in the chart below. Hopefully those who are responsible for government policy could take notice of these figures and trim all this excess bureaucratic fat from the defense budget.

Department of Health and Human Services (HHS)

THE DEPARTMENT OF HEALTH AND HUMAN SERVICES is the United States government's principal agency for protecting the health of all Americans and providing essential human services, especially for those who are least able to help themselves.

THE DEPARTMENT INCLUDES MORE THAN 300 PROGRAMS, covering a wide spectrum of activities. Some highlights include:

Health and social science research
Preventing disease, including immunization services
Assuring food and drug safety
Medicare (health insurance for elderly and disabled Americans) and Medicaid (health insurance for low-income people)
Health information technology
Financial assistance and services for low-income families
Improving maternal and infant health
Head Start (preschool education and services)
Faith-based and community initiatives
Preventing child abuse and domestic violence
Substance abuse treatment and prevention
Services for older Americans, including home-delivered meals
Comprehensive health services for Native Americans
Medical preparedness for emergencies, including potential terrorism. 5

So again I'll ask, has this department lived up to the goals of its mission statement? Since we are talking about the health of Americans, I think a close look at some medical statistics would be a very key indicator of that success. According to a group of PhDs:

"The number of unnecessary medical and surgical procedures performed annually is 7.5 million. The number of people exposed to unnecessary hospitalization annually is 8.9 million. The total number of iatrogenic [induced inadvertently by a physician or surgeon or by medical treatment or diagnostic procedures] deaths shown in the following table is 783,936.

It is evident that the American medical system is the leading cause of death and injury in the United States. The 2001 heart disease annual death rate is 699,697; the annual cancer death rate, 553,251." 6

They go on to say that the the industry is responsible for nearly one million deaths, at a cost of about $482 billion. These amounts are in 2001 dollars, which represent 77% of the Department of Health's FY2006 budget. To say that they have erred in providing for the health and welfare of Americans is a gross understatement.

The Food and Drug Administration (FDA), a major agency within HHS, is responsible for the oversight of food and drug safety in the country. The Centers for Disease Control (CDC) is a sister agency and close affiliate. The agencies have failed miserably! The health of Americans has degenerated beyond belief under the watchful eye of these agencies. A key indicator of health of course is the weight of an individual. Beginning in the 1980s, the country saw a rapid rise in the obesity and overweight rates of Americans. The National Health and Nutrition Examination Survey (NHANES) listed below chronicles the increase. 7

As you can see, 64% of Americans were overweight as of the year 2000, with nearly half of these obese, or severely overweight. The number of overweight Americans jumped by 36% in 20 years, corresponding to an annual growth rate of 1.6%. This is an absolute tragedy by any measure. The number of obese Americans more than doubled in this time-frame, with an annual growth rate of about 3.7%. The fact that the obesity growth rate has outpaced that of simply being overweight is evidence that once a person becomes overweight, it becomes much easier to continue in a downward spiral in relation to overall health.

Social Security Administration (SSA)

The Social Security Administration's mission is to advance the economic security of the nation’s people through compassionate and vigilant leadership in shaping and managing America's Social Security programs. 8

U.S. citizens all have a social security ID number and are strongly advised to pay of their salary, 6.2% for social security, and 1.45% for Medicare to be reaped upon their retirement. These withholdings of earnings (FICA taxes) are held in trust by the United States on behalf of its citizens. So let's evaluate the trustees and see if they have been in compliance with their fiduciary duty to it's beneficiaries.

As of 2006, the excess of expenditures over revenues, was nearly $6.5 trillion. The annual deficits of the program have increased at a rate of 9% since 2002. The numbers reflect the 75 year plan and include future nominal revenues and expenditures through the year 2080 discounted to their present value. Medicare (Part A, the version most citizens contribute to via wage withholdings), which is technically administered by the Department of Health, is in even worse shape with a 2006 deficit amount of $11.3 trillion. The enormity of the numbers can be attributed to the baby boomer generation nearing retirement age. The year 2007 will be the start of an exponential trend upward in the difference between beneficiaries for social security benefits, and the labor force that will be contributing to the trust fund. The year 2017 is the first year where projected payments to beneficiaries will exceed contributions from the current workforce. I must add that the GAO is predicting a long-term "real" wage increase of about 50% higher than the projected CPI. This despite the fact that real wages have been declining since 1964. 9 This means they are expecting nominal wages to out-pace inflation in the long run. If you assume that the two are equal, then the 2017 date of expenditures exceeding revenues will be much sooner. Listen to a video interview of David Walker, the current Comptroller General for the Government Accountability Office (GAO), the nation's top accountant and the federal government's auditor, describing the ensuing crisis of social security and Medicare brought about through "fiscal irresponsibility."

I'm not sure about you but this sounds like yet another failed government program to me. The beneficiaries of Social Security and Medicare, the general working public, are contributing to a fund that will not be able reimburse him in the far future. The FICA employment taxes have effectively overtaxed the middle and lower class of citizens with its cap on income subject to social security taxes to just under $100,000. Seeing as this is a dead program, a good idea would probably be to cut your losses and withdraw from the plan altogether. Participants should tell the United States government they no longer wish to voluntarily contribute to a plan that provides them no benefits. Title 48, as well as Title 26 concerning the Internal Revenue Code, is not public law, but private contract law which makes it voluntary. Furthermore, nationals (not to be confused with "national of the united states") are not the intended beneficiaries of the program. 10 "To qualify for these benefits, most American workers pay Social Security taxes on their earnings; future benefits are based on the employees' contributions." 11 Withdrawing from the trust fund will afford you an increase in income of the 7.65%, 15.3% for self employed individuals, that you have been essentially unconditionally donating. Who wouldn't want a 15% raise? Pull your money out of this house of straw and do with it as you wish.

Department of Veteran Affairs (VA)

"Our goal is to provide excellence in patient care, veterans' benefits and customer satisfaction. We have reformed our department internally and are striving for high quality, prompt and seamless service to veterans. Our department's employees continue to offer their dedication and commitment to help veterans get the services they have earned. Our nation's veterans deserve no less." "Of the 25 million veterans currently alive, nearly three of every four served during a war or an official period of hostility. About a quarter of the nation's population -- approximately 70 million people -- are potentially eligible for VA benefits and services because they are veterans, family members or survivors of veterans." 12

A look at the numbers reveals that, although the VA (Department of Veteran Affairs) is the 5th largest cost center for the United States, its budget is just under 4% of the total annual operating expenditures of the government. According to Wikipedia:

"VA's budget—which has always been sparse—has been pushed to the limit in recent years by the War on Terrorism.[2] In December 2004, it was widely reported that VA's funding crisis had become so severe that it could no longer provide disability ratings to veterans in a timely fashion....VA's backlog of pending disability claims under review (a process known as "adjudication") peaked at 421,000 in 2001, and bottomed out at 254,000 in 2003, but crept back up to 340,000 in 2005." 13

The War on Terrorism noted above caused a priority shift on the part of our government. The War on Terror has resulted in record annual deficit spending since its commencement in 2003. This has resulted in an annual increase in our cost of borrowing. The 2006 interest payment amount of $222 billion on the national debt represents an increase over the prior year's payment by 22%. In this same period, the VA funding has plunged by a whopping 58%!

So what does it mean? It means if you go off to war to risk your life and limb for the benefit of your country, then your country-the United States Corporation's political administrators-will not return the favor. So quite simply, do not enlist in a combat career with a government that will make promises it can't deliver on...

(continued in part 2)

copyright FranG 2007

No comments:

thus always to tyrants authors

Brandon Dean (splitbabyniblet)


Joshua Berry (tattoogeek)

you see what happens?

"I, like the arch-fiend, bore a hell within me, and finding myself unsympathized with, wished to tear up the trees, spread havoc and destruction around me, and then to have sat down and enjoyed the ruin." --Mary Shelley, from Frankenstein