USA Inc.: Buy, Hold or Sell?

If the U.S. was a company, would you buy, hold, or sell the stock? A voluminous report put out last year by Mary Meeker sought to answer that very question. Since we’re in the thick of the presidential elections, why not review the important financial state of our great nation.

For those of you who may not know who she is, Mary Meeker is the well-known partner at Kleiner Perkins Caufield & Byers, who is also affectionately known as the “Queen of Internet.” Apparently, beyond her renowned expertise in analyzing and valuing tech companies and start-ups, she also has the knack of dissecting government statistics and distilling wonky numbers down to understandable terms for the masses. “Distilling” may be a generous term, given the massive size of her 460-page report, USA Inc., but nevertheless, I am going to attempt to synthesize this gargantuan report even further.

As a visual learner, I think some key cherry-picked slides from her report will help put our multi-trillion debts and deficits in context, so here goes…

If one spends a few hundred billion dollars here, and a few hundred billion dollars there, before you know it, a trillion dollars will have piled up. Currently our government has run $1 trillion+ budget deficits for three years, and the estimated deficit is for another trillion dollar deficit this fiscal year. If you have ever wondered how many football fields it takes to fill with a trillion dollars of cash, then today is your lucky day. The answer: 217 football fields.

In order to determine the relative health of USA Inc., Meeker created financial statements for our country, starting with the income statement. As you can see from the chart below, unfortunately USA Inc.’s expenses have been significantly larger than its revenues, creating a “discouraging” trend of negative cash flows (deficits). An entity that takes in $2.2 trillion in revenue and spends $3.5 trillion, cannot sustainably continue this trend for long, before significant financial problems arise. The largest contributing factor to our country’s losses (deficits) has been the exploding costs of entitlements, including Medicare, Medicaid, and Social Security.

As the pie chart shows, the major categories of entitlements comprise a whopping 58% of USA Inc.’s 2010 total expenditures.

Why are entitlements such a massive problem? The plain and simple answer to why entitlements are a major issue is that government expenditures are growing too fast. You can’t have expenses growing significantly faster than revenues for 45 years and expect to be in happy financial place.

Another reason for the abysmal spending record is due to politicians horrendous forecasting abilities. Future promises are made by politicians to garner votes today, and when they make overly rosy estimates about the costs of those promises, future generations are left holding the underfunded bag. Meeker points out that when Medicare was instituted in 1966, total future spending of $110 billion turned out to be about 10x more expensive (see chart below) than originally planned…ouch!

Trillion dollar deficits and debts can’t be solely blamed on entitlements, but $700 billion in annual defense expenditures is not exactly chump change. The inopportune timing of the financial crisis in 2008-2009 didn’t help either, while two unfunded wars were being fought. Even if you strip out the wars, defense spending is still obscenely high. Given our poor state of financial affairs, we cannot afford to be the globe’s babysitter (see Impoverished Global Babysitter). Legacy Cold War spending on obsolete ground warfare needs to be reprioritized to 21^st Century threats (i.e. focus on unmanned drones and coordinated intelligence). When a government spends more than the top 25 countries combined (see chart below), that country can certainly find some defense fat to trim.

The out-of-control gluttonous government spending is a threat to our national security, and although I wish I could say time alone will heal our fiscal wounds, unfortunately the opposite is true. Time is our enemy because the ticking demographic time bomb is about to explode, unless government acts to solve our spending problems. For starters, Americans are living longer, which means entitlement spending has accelerated faster than revenues collected, and life expectancy consistently continues to rise. As you can see below, life expectancy has outpaced Social Security age adjustments by +23% over a 74 year period.

Another self inflicted problem contributing to our colossal health care costs is the obesity epidemic. Over an 18 year period, the rate of obesity more than doubled to 32%. Individuals can and should shoulder more of the burden for these belt-busting costs, and government should spend more on prevention and education in this area. Bad drivers pay higher premiums for their auto insurance, so why not have bad eaters pay higher premiums? Genetics certainly can play a role in obesity, but so to do eating habits. The same accountability principle should be applied to smokers who overly burden our healthcare system too.

The USA spends more on healthcare than all OECD countries combined and 3x the OECD per capita average, yet as you can see from the chart below, the USA is not getting a life expectancy bang for its buck. The argument that the U.S. has the best healthcare in the world may be true in some instances, but the overall data doesn’t support that assertion.

The problem is easy to identify: Government spending going out the door is running faster than the revenues coming in via taxes. The solution is easy to identify too: Politicians need to cut spending, increase taxes, and/or do a combination of the two options. Like dieting, the solutions are easy to identify but difficult to execute.

Almost everyone wants the government to spend less, but at the same time nobody wants their benefits cut. You can’t have your cake and eat it too. Citing two different studies, Meeker shows how 80% of Americans want a balanced budget as a national priority, but only 12% are willing to cut spending on Medicare and Social Security.

The rubber will hit the road in the next few months when politicians in a post-presidential election period will be forced to face these difficult “Fiscal Cliff” choices – $700 billion+ in tax hikes and spending increases that jeopardize the current recovery and our fiscal future.

As market maven Mary Meeker recognizes, our fiscal situation is quite “discouraging”. With that said, although USA Inc. may have earned a current “Sell” rating, Meeker acknowledges that our country can become a positive turnaround situation. If voters actively push politicians to making difficult but necessary financial decisions to lower deficits and debt, investors around the globe will be ready to “Buy” USA Inc.’s stock.

CORPORATE TAKEOVER OF US GOVERNMENT WELL UNDERWAY
by deborah, Monday, November 29, 2004, 20:07

“Still think you’re free? Still think all you have to do is vote the incumbent out of office and everything will automatically return to ‘normal.’ It’s too late. Protesting, voting, or - laughably - letters to the editor won’t change anything.

Look at the corporate info I found at the Delaware Secretary of State website:

INTERNAL REVENUE TAX AND AUDIT SERVICE (IRS)
For Profit General Delaware Corporation Incorporation date 7/12/33 File No. 0325720

FEDERAL RESERVE ASSOCIATION (Federal Reserve)
Non-profit Delaware Corporation Incorporation date 9/13/14 File No. 0042817

CENTRAL INTELLIGENCE AUTHORITY INC. (CIA)
For Profit General Delaware Corporation Incorporation Date 3/9/83 File No. 2004409

background info: Transfers: With the National Security Council to the Executive Office of the President by Reorganization Plan No. 4 of 1949, effective August 20, 1949; to independent agency status by EO 12333, December 4, 1981.

Central Intelligence Group established under the National Intelligence Authority by Presidential directive, January 22, 1946, to plan and coordinate foreign intelligence activities. By National Intelligence Authority Directive 4, April 2, 1946, NIA assumed supervision of the SSU dissolution during spring and summer 1946, assigning some components to Central Intelligence Group at request of Director of Central Intelligence, and effecting incorporation of the remaining units into other War Department organizations. SSU officially abolished by General Order 16, SSU, October 19, 1946. Central Intelligence Group and National Intelligence Authority abolished by National Security Act, which created the CIA, 1947. SEE 263.1.

FEDERAL LAND ACQUISITION CORP
For-profit General Delaware Corporation Incorporation Date 8/22/80 File No. 0897960

RTC COMMERCIAL ASSETS TRUST 1995-NP3-2
For-profit Delaware Statutory Trust Incorporation Date 10/24/95 File No. 2554768

SOCIAL SECURITY CORP, DEPART. OF HEALTH, EDUCATION AND WELFARE
For-Profit General Delaware Corporation Incorporation date: 11/13/89 File No. 2213135

UNITED STATES OF AMERICA, INC
Non-profit Delaware Corporation Incorporation Date 4/19/89 File No. 2193946
http://www.state.de.us/corp/directweb.shtml

Please look at #1 at the end of the paragraph it states “click here for status on the web.” From there, at the end of the first paragraph “receive a status inquiry on line, CLICK HERE.” That takes you to ‘General Information Name Search.’)

Keep in mind - these are just the listings I could find. For example, I tracked down the Bureau of Engraving and Printing - in the state of Texas (foreign corp from the District of Columbia).

This means, as ‘citizens,’ we are assets of the corporation. It doesn’t matter who is in office, the board of directors and the shareholders own and run the country - just as in any other corporation.

Roosevelt’s quote has an entirely different meaning now:

“The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson.” — Franklin D. Roosevelt in a letter written Nov. 21, 1933 to Colonel E. Mandell House

The thing to find out, and I’m hoping the corporate records will show, is who are the shareholders? Who profits - for example - from the ‘private, for-profit, corporate CIA’ or the ‘private, for-profit, corporate IRS’ or the ‘private, for-profit Social Security’ - that those in charge are now telling us is ‘broke.’ Who is on the board of directors of ‘UNITED STATES OF AMERICA, INC.’

Ask anyone you know if they are aware of this. Call your congressman’s office and ask them. Why doesn’t anyone know? Why isn’t this casually mentioned in the news? ‘The Board of Directors of the United States of America, Inc., today ruled........’ ‘The Board of Directors of the Social Security........’ ‘Today, the Central Intelligence Authority filed as a private for-profit corporation.’ Why do those in charge never mention this? Why, searching on any search engine, doesn’t this information come up?

Because we’re being lied to. Ever wonder why those who fight the IRS are not allowed to bring up their Constitutional Rights in tax court? Constitutional Rights do not apply in an equity court. Contract law supersedes individual and Constitutional Rights. Corporate law is a totally different animal from common law. Ask any corporate attorney. You’ve inadvertently signed contracts with this bastard entity posing as the ‘free’ United States of America - when you registered to vote, when you applied for a checking account (at a Federal Reserve corp bank - look at your signature card, it states you will comply with all rulings from the Secretary of the Treasury), when you applied for a social security card.....

Ever look at the trust corporations (such as the RESOLUTION TRUST CORP (RTC) associated with the UNITED STATES OF AMERICA, INC.? Trust - a fiduciary relationship in which one party holds legal title to another’s property for the benefit of a party who holds equitable title to the property. Who holds the equitable title? Ever notice property deeds state ‘tenant’ when referring to the supposed owner?

We are ruled by fictitious entities - corporations are fictions. We have been lied to, our entire lives, that we are free. The United States is owned, lock, stock, and barrel, each of us as citizens of the United States is owned. The question to which I want the answer is: Who owns us?

“The few who understand the system, will either be so interested in its profits, or so dependent on its favors that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantages...will bear its burden without complaint, and perhaps without suspecting that the system is inimical to their best interests.” - Rothschild Brothers of London communiqué to associates in New York June 25, 1863

This means, as ‘citizens,’ we are assets of the corporation. It
doesn’t matter who is in office, the board of directors and the
shareholders own and run the country - just as in any other
corporation.

To read the rest of the article go to:
http://www.urbansurvival.com/lastweek.htm

“Another U.S. Corporation - U.S. Treasury
I found another one - This is time-consuming!!!

UNITED STATES TREASURY / U.S. TREASURY, INC
For-profit General Delaware Corporation Incorporation Date 02/08/1990 File No. 2221617

Yes, we are planning to write a couple of simple emails. Maybe I’m dumb, but why are all the major government agencies set up as corporations???

One email will go to the Secretary of State of Delaware asking how and WHY it is that all these agencies are taking out corporate personas - isn’t the beloved Constitution good enough for the dweebs in charge any more? And for the agents (for whom service is permitted) what about a letter asking for a) corporate minutes as a shareholder, and b) a request for notification of the annual shareholders meeting as required by Delaware law?”
Source:

http://rense.com/general60/gove.htm

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