The United States Government Accountability Office is on the case…
GAO is out to specify the amount of taxpayer monies lost to fraud at the federal level:
Measuring and estimating the extent of fraud is part of broader efforts to improve agencies’ actions to strategically manage fraud risk. The broader work includes putting those measures and estimates in context so that the federal government can effectively use fraud measurement and estimation to enhance its ability to prevent, detect and respond to fraud.
We are still in our research and design phase, so we do not yet have a finalized timeframe. However, we are striving to complete the work before the end of the year.
Just so. And we are striving to complete our work to cease drinking alcohol, to shed 50 pounds of blubber and to be kind to our fellow man — all before the end of the year.
We hazard our work will prove equally successful as GAO’s work.
Results to date are profoundly disappointing… though we delight in reminding ourself that the year is youthful.
We nonetheless wish GAO the highest luck.
“Clean up the Whorehouse”
Incidentally: The Office of Management and Budget confirmed $4.5 billion in fraudulent spending during fiscal year 2021.
The true amount? We can merely speculate. Yet we bet high the true figure vastly exceeds it.
GAO’s anti-fraud campaign puts us in mind of the late libertarian tub-thumper Frank Chodorov.
They are out to “clean up the whorehouse,” while “keeping the business intact”… in Mr. Chodorov’s unimprovable characterization.
Yet while the United States Government Accountability Office alerts us to fraudulent misuse of taxpayer monies… the Congressional Budget Office alerts us to a fraud greater yet… a fraud of proportions truly colossal.
The Real Fraud Upon the American People
The New York Times gives the greater fraud’s particulars:
The United States is on track to add nearly $19 trillion to its national debt over the next decade, $3 trillion more than previously forecast, the result of rising costs for interest payments, veterans’ health care, retiree benefits and the military, the Congressional Budget Office said Wednesday.
Another $19 trillion! Riveted atop today’s $31.5 trillion!
Thus we can expect a galactic $50.5 in national debt by 2033… if CBO’s crystal-gazing has anything in it.
We concede it at once: CBO must weigh unknowable and imponderable variable after unknowable imponderable variable.
We hazard this bunch cannot give an accurate reading one month out — at the very price of its soul — much less one decade out.
And each assumption it entertains may be fated for the hellbox.
Perhaps the true figure will come in lower. It is quite possible.
What if It’s Even Higher?
Yet we must concede the grim possibility that CBO gives a true reading — or that the true figure will exceed CBO’s $50.5 trillion guesswork.
We must also issue a very stringent qualification…
$50.5 trillion of debt, taken alone, is plenty handsome. Yet it cannot be considered alone. It must be shoehorned into… context.
Assume two men. Each bears a $50,500 debt. That is, the nominal debt they shoulder is identical.
Now consider: One of these men takes aboard $1 million in annual income. He is flush… and can negotiate his $50,500 debt quite easily. It represents no great burden upon him.
Meantime, the other man hauls in $75,000 annually. A debt-free fellow can scrape along generally well with his $75,000.
But what if his $75,000 must hold aloft a $50,500 debt burden? His debt forms an impossible millstone upon his neck. It is unendurable and will soon swamp and sink him.
This man is in a very bad way.
Can the U.S. Support Its Debt?
Can the United States of 2033 hold a $50.5 trillion federal debt upon its shoulders?
We are riddled and hagridden by doubt. For the matter of that…
Can the United States of 2023 hold a $31.5 trillion federal debt upon its shoulders?
Again, we are not convinced that it can. Explains Jim Rickards:
Countries are no different than people, at least to that extent. Right now, the debt is $31 trillion, but GDP is around $25 trillion, give or take. You can express it as a percentage. So if you take the amount of debt, divide it by GDP, what’s that number? Right now, that number is about 124%. In other words,. When you divide 31 by 25, the number you get is around 24. 124% is the current U.S. debt-to-GDP ratio.
And so, Jim?
There’s a ton of economic research indicating that a debt-to-GDP ratio of 90% represents the danger zone. That’s the red line. When it hits 90%, something happens, and that something is that you no longer get a dollar of growth for a dollar of debt. When you go above 90%, the so-called money multiplier goes negative, meaning that a borrowed dollar no longer generates growth. It just adds more debt. And the higher you go above 90%, the less growth it generates. At 124%, the U.S. is far above that threshold.
Now, you can’t borrow your way out of a debt crisis. The more you borrow, the worse it gets. You’re just digging yourself a deeper hole. You’re in a death spiral heading for default. Of course, the U.S. is unlikely to default because we can just print the money. But that’s really just another form of default that destroys the currency ultimately. The only real way out is to cut spending and stop the borrowing.
We noticed a recent article asking the impossibly and unfathomably naive question:
“Will Federal Spending Be Brought Under Control?”
We fell instantly from our chair, stricken and convulsed with laughter.
As well ask if the abovesaid whorehouse can be brought under control.
Same Old, Same Old
If you believe that Republican victories in the 2024 elections will “clean up the whorehouse”… and ax the budget… have another guess.
From the article just referenced, authored by a certain Jason Sorens:
The Republican House will probably shift spending somewhat from Democratic to Republican priorities, but if Democrats or Republicans take full control of D.C. after the 2024 election, they will, more likely than not, increase spending on their priorities without cutting what’s already been “baked in” to the federal budget… divided government can only delay growth in government, not reverse it.
We fear this Sorens fellow is correct. The historical record is with him, spanning decades and decades.
Of this you can be supremely certain: Congress is the one whorehouse that will never close…