Guest post by Joseph Marren, President and CEO of KStone Partners.
Both Hillary Clinton and Donald Trump have elected not to address the looming financial crises facing the federal and state governments. This is consistent with a global trend that a recent Wall Street Journal article noted. “Globally, the rise of political populism has pushed deficits down the list of priorities while elevating tax cuts and benefits for the working class.” The media appear to be willing to give both politicians a pass on this issue. They should not. Why? The upcoming presidential election continues a lifetime tradition for citizens of casting their votes without the benefit of having access to an accurate and complete published account of the total receipts and expenditures of the U.S. Government. The federal government’s and all fifty states’ budget deficits and debt are exponentially higher than what they say that they are. None of the headline figures used as the basis of public discourse have any relevance to the true state of the federal or state governments’ finances.
The federal and state governments have controlled financial reporting and thereby public opinion to minimize their accountability for spending. Our federal and state politicians do not want to be held accountable for the full extent of their spending and, generally, wish to make re-election easier for incumbents. Hence, they collude to underreport appropriations and expenses. Proper reporting would lead to spending cutbacks, tax increases and/or recriminations for overspending, all of which are likely to cause voter dissatisfaction and changes at the polls. The failure to publish a complete and truthful statement and account of the nation’s finances has made our republic dysfunctional, plagued by successive budget-deficit and debt-ceiling crisis. The frauds have brought the federal and state governments to the brink of financial Armageddon. The purpose of the memorandum “Statement and Account Clause & Appropriations Clause Explained” (http://bit.ly/2ccIBmA) is to describe these frauds. They have been executed with substantial assistance from the accounting profession. The memorandum was recently submitted to the Federal Accounting Standards Advisory Board in response to their request for comment on its Tax Expenditures Exposure Draft.
Article I, section 9, clause 7 of the United States Constitution states: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time,” The first part is called the Appropriations Clause and the second part is called the Statement and Account Clause. Since the nation’s founding, the Supreme Court has not opined on the meaning of the Statement and Account Clause, including how it interacts with the Appropriations Clause.
None of The President’s Budget, the Financial Report of the United States Government or the Combined Statement of Receipts, Outlays and Balances (the “official” Statement and Account) complies with Article I, section 9, clause 7. As a result, several private rights protected by our Constitution have been violated including the right to vote, freedom of speech, due process, equal protection, the right to financial information and political accountability. These rights have also been violated by the states since their reporting violates the antifraud provisions of the nation’s securities laws and constitutional requirements. States have violated the right to vote under the Fifteenth Amendment and the other rights have been violated pursuant to their incorporation under the Fourteenth Amendment. Citizens can sue the federal or state governments for violation of these rights. Another insidious aspect of the governments’ financial reporting is that it creates a perpetual fraud on the federal and state judiciaries.
Primary responsibility for the fraudulent and unconstitutional financial reporting by the federal government lies with the leadership on both sides of the aisle in the House of Representatives and the Senate as well as certain senior finance officials. Therefore, a large number of our current and former politicians and senior finance officials have violated their oath to uphold the Constitution. Arguably, current officials and politicians have committed “high crimes” providing a basis for the impeachment. The implications for the accounting profession and its rule-making bodies for its role in the frauds may be much more serious. The memorandum raises the question as to whether current arrangements for accounting standards setting and auditing for the federal and/or state governments or any of their related entities rise to the level of being a “criminal enterprise” and a “Political Protection Racket” under the RICO Act.
The federal government has known for a very long time that its accounting standards setting process is unconstitutional. States know that their accounting standards setting process is also unlawful. In addition, the federal and state governments have actively worked to cover up their frauds. Not surprisingly, current arrangements permit federal and state politicians to disclaim any responsibility for federal and state financial reporting.
How could this happen? Where is Congress? Where is the people’s financial champion in the United States Senate – Elizabeth Warren? Where is the SEC? Where are the Federal Reserve’s Governors? The memorandum answers these and many other related questions.
Joseph H. Marren
Concerned Citizen
marrennine@aol.com
914-525-3216