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America's biggest crook: Walter Williams fingers Uncle Sam, not Enron ^ | Wednesday, April 17, 2002 | Dr. Walter Williams

Posted on 04/17/2002 12:05:49 AM PDT by JohnHuang2

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. 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 baldfaced 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 that established Generally Accepted Accounting Principles. 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.

TOPICS: Crime/Corruption; Editorial; Government; News/Current Events
KEYWORDS: socialsecurity; walterwilliamslist
Wednesday, April 17, 2002

Quote of the Day by friendly 4/17/02

1 posted on 04/17/2002 12:05:49 AM PDT by JohnHuang2
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To: *Walter Williams list
index bump
2 posted on 04/17/2002 12:08:04 AM PDT by Fish out of Water
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To: *Social Security;Free the USA
index bump and fyi
3 posted on 04/17/2002 12:09:22 AM PDT by Fish out of Water
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To: JohnHuang2
Of course it's a scam that Washington was complicit in. You think Washington didn't expect this? These guys wrote the rules. They knew what they were creating but they wanted to please certain lobbyists so they made it so damn confusing trying to please everyone and now the shoes fallen.

If corporations got away with a 1/10th the gov't does we'd be in trouble.

4 posted on 04/17/2002 12:11:41 AM PDT by Bogey78O
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To: JohnHuang2
Were the mainstream press doing their job this couldn't happen. The people wouldn't allow it. Worse, the press is in on the scam and they are abetting it, going all the way back to their infatuation with Communism in the 20s and 30s. They promulgated FDR's scam and they continue to hide it today..
5 posted on 04/17/2002 6:53:26 AM PDT by Mind-numbed Robot
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To: JohnHuang2
A Dr. Walter Williams bump!
6 posted on 04/17/2002 6:55:32 AM PDT by Lucky2
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To: JohnHuang2
yeah but....

bush is alot better than gore/clinton....

and we all need to work within the party to change it...


How can anyone continue to reward the dems or gops
with their vote? We know what they're doing yet WE
do nothing.

7 posted on 04/17/2002 7:01:46 AM PDT by WhiteGuy
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To: JohnHuang2
Great article...even our mainstream press-types should be able to understand what is happening.
8 posted on 04/17/2002 7:20:43 AM PDT by Cuttnhorse
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To: Cuttnhorse
...even our mainstream press-types should be able to understand what is happening.

Oh don't think for a minute that they don't understand what is happening. Unfortunately they are a bunch of Nanny-State, Big Governement is good, sniveling, spineless, boot-licking, commie a$$h0le$. Luckily for them both the Dims and Repulsies are driving the American masses straight down that road with the whips of tyranny. Eventually people will get fed up with it. Americans are still a unique individualist minded sort. The commies will find this out when they put their hand out for more and it gets lopped off.

9 posted on 04/19/2002 11:23:59 AM PDT by Hard Case
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To: Howlin
Good stuff - bump...
10 posted on 05/01/2002 7:29:19 PM PDT by Libloather
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Rush's take -

Bureaucrats should go to jail too!

The Democrats like to take credit for the school lunch program, and to accuse Republicans of wanting to "cut" it even though they were going to increase funding. Well, well, well! Food poisoning outbreaks in screwels increased by 10% a year during the 1990's - exactly when Bill Clinton was in office!

If Democrats are going to say that only they can be trusted to administer this program, there's only one logical conclusion: Democrats are to blame for poisoning our kids. But bureaucrats always exempt themselves from responsibility for failure. They shake their heads as if we're dumb children and say, "You can't look for results. You have to look at our intentions! We were under-funded!"

Too many people have come to believe that the federal government can do no wrong - and I'm sick of it. In fact, Dr. Walter E. Williams, semi-guest host on the EIB Network and professor of economics at George Mason University, has written a column that makes a fantastic connection between the misdeeds at Enron and the way the government plays with your Social Security money.

For example, Enron took loans and counted them as income. Liberals in Washington take loans from Social Security and count that as income too. The comparisons go on and on, which leads to the obvious question: if we want to put Enron executives in jail for squandering their employees' retirement money, shouldn't someone in the federal government go to jail for squandering the American peoples' retirement cash?

11 posted on 05/01/2002 7:47:42 PM PDT by Libloather
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To: JohnHuang2
Bookmarked---a keeper.
12 posted on 05/21/2002 12:21:35 PM PDT by The Raven
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