A legislative orgy in Washington, D.C. ensued this week as the Senate unanimously passed a business fraud bill in response to the recent string of corporate accounting misdeeds. The bipartisan bill, aimed at holding executives responsible for fraudulent behavior, levies stiff penalties and jail terms for company fraud and tightens federal regulation of the accounting industry.
Like sharks in a feeding frenzy, Congressmen grasping for election-year straws rushed to denounce corporate CEOs for their bad behavior.
“It is high time we call corporate executives on the carpet and hold them responsible,” demanded Senator Max Cleland (D – GA).
Senator Charles Grassley (R – IA) denounced “the crooks running these corporations.”
Even President Bush joined the fray. “We intend to hold people accountable,” proclaimed Bush, whose previous insider trading activities as a director at Harken Energy are currently under investigation.
Responsibility? Accountability? What a unique concept, especially considering the source. The U.S. Congress, hardly a paragon of virtue, has a long and storied history of financial impropriety and mismanagement of taxpayer funds. To find foolproof evidence of this political duplicity, one needs to look no further than the largest expenditure in the federal budget--Social Security.
The Social Security program is possibly the biggest fraud ever imposed upon the American people. This “pay-as-you-go” system is nothing more than a federal Ponzi scheme designed to foster generations of dependency on government. Estimates of the program’s future debt obligation--the amount of money owed to current and future Social Security recipients--range from an unbelievable $9 trillion to a mind-numbing $20 trillion.
This means that the average newborn in the United States, just minutes out of the comfy confines of the womb, inherits as much as $72,000 in debt from one federal program alone! On a positive note, this number might encourage the bureaucrats to repeal those pesky child labor laws. After all, what better way to increase federal revenue than by welcoming new employees into the workforce?
Unfortunately, most Americans know nothing about the dire fiscal straits facing the “third rail of politics.” Federal accounting procedures conveniently itemize Social Security as an “off-budget” expenditure, allowing the government to hide this debt from an unsuspecting and ignorant public. If the program’s unfunded liability were included in official government totals, the national debt would be two to five times greater than the widely accepted $6 trillion figure. Yet, the politicians continue to propagate the myth of the Social Security "Trust Fund" and the ubiquitous "lock box" at every opportunity.
While few Americans are wary of the extent of Social Security’s troubles, many are at least mindful of its problems. Polls consistently report that half of young Americans do not expect to receive ANY Social Security benefits at retirement age. Maybe these kids aren’t so dumb after all.
In an ironic twist to this week’s Senate action, the Bush administration admitted that most federal agencies are troubled with bookkeeping problems--on the same day that the Senate passed its corporate accountability bill! In a classic case of “do as I say, not as I do,” the White House Office of Management and Budget reported that 22 of 26 agencies received the worst rating for financial management. Under federal guidelines, this rating indicates books that are “in such poor shape that auditors cannot express an opinion on the agency’s financial statements, if an agency has a history of spending more money than given to it in law by the Congress, or the agency head is unable to provide an unqualified assurance statement as to the systems of management, accounting and administrative controls.” Apparently, the feds have been adopting Arthur Andersen’s accounting procedures when balancing their books.
With elections drawing near, federal bureaucrats are desperate to glom onto any issue that will win them political brownie points with their constituents--and the rash of corporate accounting irregularities may prove to be that issue. However, Congressmen need not look into the private sector to find corruption when their own criminal activities have gone unchecked for far too long.
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