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