Which is worse: Worldcom or Congress? AND NOW America's Biggest Crook.

tm37

Lifer
Jan 24, 2001
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Written By Walter Williams

LINK

Thought this was a really good read and thought you may enjoy this.


President Bush said he was "deeply concerned" about some of the accounting practices in corporate America and called "outrageous" the disclosure that WorldCom, which is $32 billion in debt, had hidden $3.8 billion in expenses.


The president added, "We will fully investigate and hold people accountable for misleading not only shareholders but also employees."


The Securities and Exchange Commission (SEC) filed fraud charges against the nation's No. 2 long-distance telephone company, as the company slid toward bankruptcy. WorldCom is being called the biggest case of crooked accounting in U.S. history, where it hid nearly $4 billion worth of expenses from investors in order to make its bottom line look good. But is WorldCom really America's biggest case of accounting gimmickery and deception? I don't think so.


Ask the president or any congressman: How much debt does the federal government owe? Nine will get you 10 that they'll tell you that it's $3.5 trillion. If they had just a tad of sophistication or honesty, they might add intragovernmental debt that'd bring the "total debt" to slightly more than $6 trillion. Even that figure represents a level of creative accounting, deception and lies that make the actions of Enron and WorldCom seem like child's play.


Washington's deception about federal debt can be found in a report by Andrew J. Rettenmaier, a senior fellow at the Dallas-based National Center for Policy Analysis, titled, "How Big Is the Government's Debt?" Rettenmaier says that, as of 2001, the accumulated federal obligations to all people who've earned Social Security and Medicare benefits are $12.9 trillion for Social Security and $16.9 trillion for Medicare. Combined with the public and intragovernmental debt, the total federal debt burden is an unimaginable $35 trillion. That amounts to roughly $120,000 for every man, woman and child in America.


It will be impossible for the government to pay that kind of debt. Washington will do what all governments do when it cannot make good on its debt. Congress will repudiate agreements with creditors by refusing to pay on agreed-upon terms or choose government's traditional method of repudiation -- inflating the currency.


There's no question that both Enron and WorldCom engaged in deceptive and dishonest practices -- in a word, fraud. Here on Earth, there'll never be the end to deceptive and dishonest practices, notwithstanding supposed protection by the SEC. We're going have to wait until we get to heaven for total honesty. But let's compare what happens when deceptive accounting practices are discovered in private industry versus when they're discovered in government.


Without the SEC, the supposed guarantor against corporate hanky-panky, lifting one finger, the market has exacted high penalties. Enron and WorldCom shares of stock and their reputations are virtually worthless. Heads have rolled.


By contrast, what happens when Congress cooks the books and deceives Americans into believing that government debt is $3.5 trillion or $6 trillion, when it's really $35 trillion? Absolutely nothing.


I bet that if you brought this up to one of our Washington politicians, he'd say: "That Williams guy doesn't know what he's talking about. What we owe to Social Security and Medicare recipients is not debt."


Of course, Enron and WorldCom might get out of their troubles by redefining what debt is as well -- but the economic arena, unlike the political arena, doesn't play that game
 

tm37

Lifer
Jan 24, 2001
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Another one

Also by Dr. Williams

America's biggest crook


The Enron case made headlines because fraud and deception of such magnitude is fairly unusual in the corporate world. Washington fraud and deception of a much greater magnitude doesn't make the headlines because fraud and deception in government is standard practice. That's what's so disgusting when politicians posture and demand that something be done to ensure honest corporate accounting practices.


You say, "Williams, what are you talking about -- Washington fraud?" Suppose a company had run up debt that it wanted to conceal from its stockholders, lenders and the Security Exchange Commission (SEC). The CEO comes up with the accounting gimmick of transferring money from its employees' retirement account to the company's budget account. That way, when auditors come around, the books are balanced showing no debt. While the company's books are balanced, the company's debt has not disappeared. It still has debt. It's just owed to a different group of people: its employees. If a CEO commits this kind of fraud and deception, he should be summarily jailed.


Washington politicians have for decades been doing precisely what Enron has been accused of doing -- concealing debt with accounting tricks. Congressmen tell us that our Social Security taxes go into a trust fund to pay for future retirement pensions. That is a boldface lie. The Social Security trust fund has no money in it. What Congress does with Social Security trust fund money is buy government bonds. The purchase of government bonds disguises the deficit by reducing the national debt.


In essence, here's what happens: Congress takes $100 billion of Social Security trust fund money to retire government debt, and the national debt will be $100 billion dollars less. But now the Social Security system is owed $100 billion dollars.


You say, "Williams, what good does that do them? There's still $100 billion dollars worth of debt." That's where you're wrong and where congressional treachery and accounting gimmicks comes in: Money owed by one government agency to another is not counted as part of the national debt. Thus, Congress' accounting gimmick is to move debt from where it's counted (public debt) to where it's not counted (Social Security debt) -- but it's debt nonetheless.


How will Congress cope with the forthcoming fallout of its crooked accounting? It will be easy. Congress will simply cheat people out of their retirement pension by gradually raising the retirement age. For example, Congress can legislate that 75 years of age, instead of 65, is when you're eligible for Social Security benefits. Unfortunately, they can't legislate that you live 10 years longer. That means you will have been cheated out of 10 years of Social Security checks.


Enron used accounting gimmicks to hide debt and make corporate executives look good and earn fat bonuses. Congress does the same thing. Each year, it transfers vast sums of money from the Social Security and the Federal Highway trust funds to hide debt, and they boastfully lie to us saying they've not only balanced the budget but created a surplus.


Corporations employ accounting practices promulgated by the Financial Accounting Standards Board (FASB) that established Generally Accepted Accounting Principles (GAAP). Government accounting practices don't come close to the honesty of private accounting practices.


But the mystery to me is why Americans are so upset over an isolated case of a private company using devious accounting gimmicks and demanding that Congress do something, while we accept without question the accounting fraud and deception that has become an inherent feature of government. I'd like to think that it's ignorance rather than a preference for government dishonesty.
 

Linflas

Lifer
Jan 30, 2001
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Easy answer: The media ignores congress and plays up the corporate shennanigans. And congress thinks they deserve a raise for this.
 

Tripleshot

Elite Member
Jan 29, 2000
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Wasn't the mantra of the Bush campaign that Bush was a businessman and not a Washington insider politican? Of course we see now that corporate and political scandels are almost one in the same. When politicains bed with corporate payoffs and "contibutions" (Bush and Cheney have raised more campaign money then any politicans in history, just since they took office, with 2 years before their elections become up for grabs. Who do you think is doing the contributing, Mom and Pop? Uh Uh! They're laid off and broke from believing their investments where secure under republican leadership)

The Feds are the biggest crooks, but they are lead by their nose rings by corporate campaign contributers and white collar strong arm "lobbiests".

Time to overhaul the entire system, starting with politicians. Make them get back to supporting their constuants, the mom and pops of kitchen table America. End the graft and coruption of insider knowledge that every politican gets by taking money from big business.

I am equal oppurtunity political basher today. Every friggen party out there has their hand out, Dems, libertarians, Reps, hell even the Aryan Brotherhood. Pull the money from all of them and see if they can sell on there ideas. They would wither and die, and from the ashes, I would hope a phoenix of pure careing for the best interest of ALL the people would come to pass.
 

wyvrn

Lifer
Feb 15, 2000
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Yep I agree with Tripleshot. Don't let the PAC's give so much money to our congress men and women.
 

shifrbv

Senior member
Feb 21, 2000
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No doubt it's the feds, but really, what's the alternative? It's like the Titanic going down. All people can do is hope to grab a floating pallet that's passing by but we know there won't be enough for everyone. Unfortunately, it's the younger generations that are going to have to deal with this and our parents haven't really left us with very many options.
 

JellyBaby

Diamond Member
Apr 21, 2000
9,159
1
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I am equal oppurtunity political basher today. Every friggen party out there has their hand out, Dems, libertarians, Reps, hell even the Aryan Brotherhood.
The libertarians have their hand out? Proof in link form, please.

Of all the parties you mentioned the libertarians are the best bet to fix the system. It's pretty clear the Ds and Rs are satisfied with fraudulent accounting of the federal government. Under Clinton's term, for instance, hundreds of millions of dollars were unaccounted for in the Dept. of Education, Transportion and others.

IIFC part of Ross Perot's campaign offed to "fix the fraud". He did well in his first bid but the second attempt, where he told Americans straight "fixing it will hurt", people lost interest.
 

Rainsford

Lifer
Apr 25, 2001
17,515
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Eh, I'm not too concerned. The government and companies have been doing this for years and years in every country in the world, and it works. No reason for this to become a big problem now unless people turn it into one.
 

Linflas

Lifer
Jan 30, 2001
15,395
78
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Originally posted by: shifrbv
No doubt it's the feds, but really, what's the alternative? It's like the Titanic going down. All people can do is hope to grab a floating pallet that's passing by but we know there won't be enough for everyone. Unfortunately, it's the younger generations that are going to have to deal with this and our parents haven't really left us with very many options.

Good grief I have been hearing this crap since I was a kid yet each generation has a better standard of living than the previous. I see parking lots at high schools full of late model cars, kids with every imaginable electronic gadget hanging off their belts yet a few companies go belly up and the stock market turns bearish and all the chicken littles come out screaming the sky is falling the sky is falling.
 

Rainsford

Lifer
Apr 25, 2001
17,515
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Originally posted by: Linflas
Originally posted by: shifrbv
No doubt it's the feds, but really, what's the alternative? It's like the Titanic going down. All people can do is hope to grab a floating pallet that's passing by but we know there won't be enough for everyone. Unfortunately, it's the younger generations that are going to have to deal with this and our parents haven't really left us with very many options.

Good grief I have been hearing this crap since I was a kid yet each generation has a better standard of living than the previous. I see parking lots at high schools full of late model cars, kids with every imaginable electronic gadget hanging off their belts yet a few companies go belly up and the stock market turns bearish and all the chicken littles come out screaming the sky is falling the sky is falling.

I've got nothing to add to this, except, why don't more people realize this?
 

JellyBaby

Diamond Member
Apr 21, 2000
9,159
1
81
Eh, I'm not too concerned. The government and companies have been doing this for years and years in every country in the world, and it works. No reason for this to become a big problem now unless people turn it into one.
That's exactly the attitude that allows it to worsen. "It's not a problem." "It doesn't matter." "I don't even believe it's happening." Do they teach Reality Denial 101 now?

It works right up until the entire system collapses.
 

Turin39789

Lifer
Nov 21, 2000
12,218
8
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Originally posted by: Rainsford
Originally posted by: Linflas
Originally posted by: shifrbv
No doubt it's the feds, but really, what's the alternative? It's like the Titanic going down. All people can do is hope to grab a floating pallet that's passing by but we know there won't be enough for everyone. Unfortunately, it's the younger generations that are going to have to deal with this and our parents haven't really left us with very many options.

Good grief I have been hearing this crap since I was a kid yet each generation has a better standard of living than the previous. I see parking lots at high schools full of late model cars, kids with every imaginable electronic gadget hanging off their belts yet a few companies go belly up and the stock market turns bearish and all the chicken littles come out screaming the sky is falling the sky is falling.

I've got nothing to add to this, except, why don't more people realize this?

I don't determine the quality of my life by the number of electronic gadgets and late model cars I see. Rome enjoyed some prosperity as it slowly ate away at its self, until third world barbarians delivered the final blow
 

Linflas

Lifer
Jan 30, 2001
15,395
78
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Originally posted by: Mrburns2007
35 Trillion

35 Trillion

35 Trillion

35 Trillion

nope, it's not getting any better.....

Nor will it as long as a majority of people give in to the urge to allow their elected officials to reach into the pocket of their neighbor to fund the things they want.
 

Tominator

Diamond Member
Oct 9, 1999
9,559
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Who do you think is doing the contributing, Mom and Pop? Uh Uh! They're laid off and broke from believing their investments where secure under republican leadership)

As usual. A Liberal with a cause but no facts.

The reason that was not used as a campaign issue to begin with was 'total disclosure' of the contributors. You are wrong.

Walter Williams is my favorite guest host on Rush Limbaugh radio....