Your tax dollars at work . . . or are they?

Apparently no-one knows exactly what your tax dollars are doing! Accounting Today reports:

The U.S. Government Accountability Office said it could not render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations.

. . .

Dodaro also cited material weaknesses involving an estimated $125.4 billion in improper payments, information security across government, and tax collection activities. He noted that three major agencies — the DOD, the Department of Homeland Security, and the Department of Labor — did not get clean opinions. Nineteen of 24 major agencies did get clean opinions on all their statements.

There's more at the link. It's sickening reading - even more so when we put that lack of financial accountability and transparency together with runaway, out-of-control spending. That's nothing less than a recipe, a license, for systemic, endemic waste, corruption and fraud.

Let's not forget, too, that for the past four years, Congress - the organ of government where all spending bills and proposals are supposed to originate - has been controlled by the Democratic Party. The 110th and 111th Congresses - running from 2007-2008 and 2009-2010, respectively - saw the two greatest increases in Federal Government debt in the history of the USA: $1.957 trillion and $3.22 trillion, respectively. The 111th Congress alone incurred more new Federal Government debt than the first 100 Congresses combined! Is it any wonder that US voters threw the rascals out last November?

I'm not giving the Republican Party a pass on this, either. During their years in control of Congress and the Senate under President Bush, they showed little or no restraint in wasting our tax dollars, and a great deal of the waste identified by the GAO occurred (or began) on their watch. Furthermore, President Bush should have used his veto power to at least try to rein in the spending. He failed. Miserably.

This country simply cannot afford to vote for spending program after spending program when it doesn't have the income to finance them, and can't even collect the information required to manage them. One can't run a nation - or a company, or a household - by borrowing most of what it needs to spend for the bare essentials, the basic necessities of life. That's what the USA has been doing for a very long time . . . and it can't continue. Every dollar added to Federal Government debt now is a millstone around our collective necks, adding to the already crippling burden of debt that we're going to have to repay in our generation and for several generations to come. What's more, if we can't account for what we're spending, how can we ever get our spending under control?

Newsweek calls it 'the tyranny of public debt', and points out:

How do we break the deadlock? The first step is to recognize that the worst is possible. History provides lessons. The first concerns the very nature of public debt: it is an obligation handed down from the present generation to future ones. The latter must always pay, one way or another—which is why public debt is acceptable only under certain conditions. First, it is tolerable only if you anticipate that future generations will be large and rich. Second, it is legitimate only if it finances forward-looking investment. Public debt can encourage growth and help make future generations richer. But for that, one must parse unwise debt (debt that finances running costs) from intelligent debt (public infrastructure for energy, transport, health care, or education).

History also teaches that public debt must be handled carefully even when it’s intelligent debt and even when the borrowing is moderate. Nobody can predict what will trigger a sovereign debt crisis because in practice such crises arise more from a subjective loss of confidence than the crossing of any specific threshold. But history has shown that almost all excessively indebted states eventually default. France did it six times, including the notorious 1797 Bankruptcy of the Two Thirds, in which the government repudiated 67 percent of the national debt. Some states have actually collapsed under sovereign debt crises: Venice in 1490, Genoa in 1555, Spain in 1650, and Amsterdam in 1770.

Still, accumulating excessive debt is far too easy. Spending naturally rises faster than revenue. But once the fatal spiral begins, how can a state escape disaster? There are only eight options:

1. higher taxes;
2. less spending;
3. more growth;
4. more lenient interest rates;
5. worse inflation;
6. war;
7. external aid; or
8. default.

All eight options have been used in the past, but only one of them is both plausible and desirable today: growth. A growing economy (which raises tax revenue) permits the absorption of debt and restores sustainable public finances. Then borrowing can resume—if it will encourage further growth. Responsible governments do not finance their everyday expenses by borrowing, and they keep their investments at a level they can repay.

Again, there's more at the link. Bold print is my emphasis. Worthwhile reading.

Peter