Wednesday, October 21, 2009

Obama, the Budgetary Slight of Hand and “Obamacare”... Just more debt!!

As if the entire Democrat health care debacle were not enough of a national disgrace, we now have another point of contention to argue with the powers that be.

One of the most boring, convoluted and confusing issues in government is the federal budget. Most people think this is a fairly simple thing in principle, but it most assuredly is NOT a simple thing because the entire process is a political and mathematical nightmare of biblical proportions. Nothing is as it should be and nothing is as it seems.

The language of the budgetary process is a unique dialect that defies all translation and is as understandable as Sanskrit or Urdu to the average guy on the street. No word in the language of the budget means the same thing as it would in common spoken or written colloquial English.

If one speaks of “spending cuts”, he is actually not cutting any money from a program of a service or agency. They are merely reducing the amount of the percentage of increase in a given line item expenditure. Nearly all government expenditures have built in increases year to year. The politicians who advocate spending cuts are just decreasing the increases, not actually cutting spending in any real sense, or measurable way.

An example is that Agency “A” has a budget of 10 million dollars this fiscal year. Each year, the administrator goes to congress and asks for an increase, say a 12 % increase in funding to cover pay raises, additional resources and other costs for the next fiscal cycle. After much debate in committees and many revisions, the congress agrees to a 10% increase. That means that now Agency “A” will have an additional 1 million dollars to spend the next fiscal year. If congress or the executive branch does a cut in expenditures as a way of placating fiscally conservative people who object to higher expenditures, they will routinely say something on the order of “Well... we will cut the budget back 10% on all discretionary spending increases or on all general increases...” That sounds like a good thing. Agency “A” should loose its 10% increase, right?


Here is what happens.....

Rather than revoke the entire increase, they cut the increase. That means that Agency “A” will only have an increase of $900,000 rather than the 1 million they were originally slated to get. What most people think is that Agency “A” was not going to get its raise or that they might actually loose $1 million out of their total budget of $10 million, reducing them down to $9 million. They (congress) can say they cut spending “10%” and the public is duped to believe that the congress is actually cutting expenditures in a real and meaningful way. In other words, the politicians and the civil service administrators and the executive branch of government are all in it together to fool the tax payers into thinking one thing as they in fact, do another.

The budget process is so confusing and made overly complex on purpose in order to conceal and to mislead any casual reviewer as to its content. The reasons for this are that they, the political elites, don’t want the average person to understand any portion of the process nor do they want John or Jane Q. Public to truly understand the scope and depth of the budgetary disaster that faces this country. So in one of the great slights of hand since Houdini, the congress, who has the constitutional power of the purse strings, drafts a budget that is so confusing and mesmerizing in its complexity that most who attempt to read and understand may be rendered mute, eyes a glaze, while others may run screaming off into the night in frustration and some others may even succumb to madness...

In all seriousness though, the real subterfuge in the process is not the massive deficits that appear on the budget, but that little known bookkeeping trick called “Off Budget” spending.

What is this you may ask?

It is a trick, or if you prefer the truth, it is a LIE designed to protect the political backsides of the powers-that-be from getting excoriated by us, the American people, by concealing the true amount of spending of the Federal government. If they, the congress and the sitting President, were up front and truthful in putting ALL spending programs on the actual Federal Budget, there would be massive political upheaval and potential sanctions to whatever party was in power in the congress and to whatever President approved such inflated budgets. Granted, they approve deficit budgets now, but the “off budget” subterfuge hides the true scope of the practice of spending what we as a nation can’t afford.

Let’s look at an example. President Reagan and Congress placed strategic petroleum reserve spending off-budget in 1982. Instead of using other means to control the size of the deficit, such as raising revenues (taxes) or cutting spending, they used the trick of placing this program off-budget making the deficit seem smaller, even though the government still needed to finance (borrow the money) for this spending program to purchase oil to just store it...just in case.

The savings and loan bailout provides another example of this practice of hiding true costs of government from the people. The Bush Administration in the years 1989 through 1992 wanted spending on this bailout program, a huge spending program in terms of the overall budget, to be placed off-budget, circumventing balance budget legislation that was on the books. Congress retained some of the spending as on-budget so there was an appearance of propriety, while placing most of it off-budget to hide the true scope.

The other great lie that has been foisted on the American people is the concept of the “Social Security Trust Fund” which has become a great piggy bank that can be raided and exploited by the political powers that be for extra cash to fund pet projects of major expenditures. The Social Security system was supposed to help folks have something for retirement, but it has proven to be a pile of loot too big for the politico’s to resist.

Social Security trust funds are financed through dedicated payroll taxes. Because of the unique nature of the funding source, it is kept off-budget and its purpose is considered sacrosanct, to provide a decent quality of life for the elderly. The funds are off-budget, supposedly safe from expropriation. The payroll taxes levied on workers were raised in the 1980s producing vast surpluses in anticipation of the baby boomer generation retiring in the following decades. The problem is that the government has since returned to on-budget deficit spending as of 2001. This has led to the federal government to borrow from the Social Security trust fund surpluses to pay for other on-budget programs. This causes the trust fund to end up in deficit (little cash and many IOU’s from the treasury) and therefore unable to have sufficient funds on hand to pay out to the growing population of retiring citizens that are beginning to come on line, utilizing the program.

In other words, we have robbed from ourselves to cover up for the lack of fiscal discipline and foresight needed by our nation to survive and to be prosperous. All this has happened regardless of political party affiliation. Both Democrats and Republican have participated and are indeed continuing to participate in this great lie and need to be brought to heel. We need to stop the practice of keeping what is in effect, a duel set of books for the national budget. If we, the common citizens did this, we would go to jail. Congress and the sitting administration need to be held accountable for this travesty. We as people need clarity - we need the truth as to what our government spends.... no games, no slight of hand to hide the real fiscal situation.


So how are they going to hide some of the costs of the “Obamacare” health care reform package off-budget you may ask?

Where is the lie?

It is complex and but in effect, they will rob from Medicare by using a 12 year old piece of legislation as a model to fix doctor payments from the off-budget Medicare program and shunt the projected $250 billion dollars they expect to save over a 10 year period to cover the on-budget shortfalls caused by the costs of “Obamacare”. This results in doctors getting paid money for “Obamacare” and Medicare and the monies being shunted off as off-budget debt (that most folks don’t know about) increasing the national debt by $250 Billion dollars. It is a complete lie...A complete fabrication and if you wish to read further details of just how this fraud works please go to:

This site has the whole sordid chapter and verse on this...

No comments: