Accurate Reporting of Financial Performance

Would you invest in this company? Better yet, would anyone lend money to this company?

• negative net worth of $44 trillion
• operating loss of $817 billion
• $1.3 trillion of negative cash flow

What actions would you take if you were the CEO of this company? What actions do you think a lender would ask that the company take before they would lend to this company?
   
Well, I think we all know that a business would immediately look at ways to cut expenses. By right-sizing and refocusing on the important tasks, most companies come out of these difficult times in a much stronger financial position and it leads to years of prosperity.
  
This is exactly what has happened at many companies since the financial crisis. While the immediate changes might be painful, it is necessary to ensure the long-term health of the company.
  
Problem is, these results are not the results of any company, they are the results for the Federal government.  Bet you've never see the financial performance of the Federal government displayed in such terms. 

So why is the government not asking all agencies to look at the spending and staffing levels and find ways to cut expenses and get the government back on a stronger financial footing? Why, because all they have to do is print more money. They also have the foolish belief that they don’t tax people enough.

No business or household would conclude that they way out of a financial situation like this, is to increase revenues. The first reaction is to control spending, then look at ways to increase revenue.

The house has the formula right, Cut, Cap and Balance. First cut spending and not in government speak, make real cuts. Second, cap spending for the next several years so that all the cuts are not simply reinstated next year. Finally, pass a balance budget amendment. All of our states have to balance their budgets, why should the Federal government be any different?

If you listen to the Obama administration they don’t think we need a balanced budget amendment. If that were the case, why are we having this huge debate about the debt ceiling? This, as well as many previous administrations, and Congress, have proven they can not control spending. It is exactly because these politicians can not live within their means that we must have a balance budget amendment!!

So, back to the original question, would you invest in or lend to this enterprise? Amazingly, many do. The Treasury has had little problem selling enormous amounts of debt to buyers willing to earn record low rates of return. Why? They know we will simply print more money or threaten to tax more. We need limits and we need fiscal responsibility restored to this country.

Not surprisingly, Harry Reid predicts that the House plan to cut, cap and balance has no chance of passing the Senate.  Could it be our elected officials do not want to be held accountable?  Without a balanced budget amendment we will continue to keep raising the debt limit and pushing the burden of fixing this financial mess on to our children and grandchildren.  We are at a pivotal point and the time to act is now!!  We owe to our children and grandchildren to fix this mess NOW.

CUT, CAP and BALANCE

It's the Spending - Stupid!!

Despite what the Obama administration and democrats would lead the public to believe we have a spending problem not a revenue problem. I prefer to use actual facts and not hyperbole like the administration, the democrats and those who have no fiscal responsibility. In fact the data I will present below is actually from the Office of the President of the United States.

So let's examine the facts. In 2001 total revenue collected by the government was just shy of $2 trillion. Spending or cash outlays during 2001 were $1.8 trillion, which yielded a $128 billion surplus. Now let's look at 2008, the most recent year for which we have actual results. Total revenue collected was $2.5 trillion, an increase of $532 billion or 26%. Spending (cash outlays) during 2008 were just under $3 trillion, an increase of 60%, which yielded a deficit of $458 billion.

Clearly, spending grew much faster than revenue between 2001 and 2008 and during that time the government spent $2 trillion more than they collected. While these numbers are depressing, these are all pre-Obama and pre-Obama Care.

For 2009, receipts were $2.1 trillion, a decline of 14% from 2008; however expenditures increased over 18% to $3.5 trillion which yielded a deficit of $1.4 trillion. Unfortunately, the story for 2010 is much the same as 2009. Receipts and outlays were essentially the same as 2009, yielding another deficit of $1.3 trillion. Sad news is that projections for revenue in 2011 are for negligible growth, but over 10% growth in spending. The deficit for 2011 is projected to be $1.6 trillion.

Clearly, this government does not know how to live within their means. The President and democrats suggest we can simply solve the problem by having rich people pay more. So, if you believe this, we would need to collect $1.6 trillion more in taxes which would be an increase of almost 75%.

Let's look at the IRS records to see if this is even possible. In 2008, the last year for which the IRS has disclosed data, taxpayers making more than $200,000 paid $440 billion in taxes nearly half of all the taxes collected in 2008 from just 2.8% of the taxpayers. Total income reported by this group was $1.9 trillion, so in order to cover the gap; we would need to tax this group at 100%. Clearly we can not tax our way out of this problem.

STOP SPENDING!! We the people can not afford the size of government as it exists today.

Full of Hot Air

A woman in a hot air balloon realized she was lost. She lowered altitude and spotted a man in a boat below. She shouted to him, "Excuse me, can you help me? I promised a friend I would meet him an hour ago, but I don't know where I am."

The man consulted his portable GPS and replied, "You're in a hot air balloon approximately 30 feet above a ground elevation of 2,346 feet above sea level. You are 31 degrees, 14.97 minutes north latitude and 100 degrees, 49.09 minutes west longitude."

She rolled her eyes and said, "You must be a Republican."

"I am," replied the man. "How did you know?"

"Well," answered the balloonist, "everything you told me is technically correct, but I have no idea what to make of your information, and I'm still lost. Frankly, you've not been much help to me."

The man smiled and responded, "You must be a Democrat."

"I am," replied the balloonist. "But how did you know?"

"Well," said the man, "You don't know where you are or where you're going. You've risen to where you are due to a large quantity of hot air. You've made a promise that you have no idea how to keep, and now you expect ME to solve your problem. You're in EXACTLY the same position you were in before we met, but somehow, now, it's MY fault