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Business Observer Tuesday, Mar. 19, 2019 2 months ago

A Call to End the Debt Crisis

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With annual deficit spending topping $1 trillion and national debt topping $22 trillion, conditions call for a national convention of the states.
by: Columnist Columnist

President Lincoln once said, “You cannot please all the people all of the time,” but then he didn’t have history’s biggest line of credit.

In this 2019 fiscal year, the United States will have a deficit of more than $1 trillion. We are spending $1 trillion more than we are taking in.

Acting as chief pleaser, Congress has authorized our federal government to spend more than its revenues for 67 of the past 79 years.

To compound matters, our accumulated national debt now exceeds $22 trillion, and there are no plans to stop, much less pay back the huge sum we owe. Interest on that massive debt soon will cost more than $1 trillion a year.

‘Extraordinary measure’

But there is good news: Help may be on the way.

Recognizing Congress is unwilling to stop its runaway generational theft, several citizens’ groups have formed to call a Convention of the States, utilizing Article V of the Constitution, to adopt an amendment requiring the federal government to balance expenses and revenues.

The Article V option would bypass Congress entirely.

To succeed in convening a convention, 34 states must agree. One such citizens’ group says it has 28 states signed on. Proudly, Florida is one of those 28 states. Six more states are needed.

Amid those efforts, I am pursuing my own initiative to build support for the Convention of the States and adopt what I have dubbed “The Comprehensive Financial Management Amendment.” It includes five steps that would insure our federal government end its unchecked spending; truly reduce our national debt; and end other less visible financial mismanagement practices that are damaging our nation’s financial health.

To be sure, amending the Constitution is an extraordinary measure. The conditions must be just right. There must be such a compelling need, a crisis, which awakens the body politic.

We are there. Our nation’s spending and national debt are crossing that threshold.

This is a historic moment for change, and we had better get it right. And getting it right requires we recognize our deficit spending and big national debt are symptoms of a much larger problem: massive federal fiscal mismanagement. That is what our citizens’ amendment must fix. It’s not just a matter of limiting spending and debt. It requires dramatic changes in the way Congress manages our finances.

Monumental task

Look what has occurred because of massive federal fiscal mismanagement without constitutional constraint. Our Congresses over many decades have…

• Created a 75,000-page, unmanageable Internal Revenue Code full of deductions, exemptions, exclusions, alternatives and other special circumstances that permit 20% of large, profitable U.S. companies and 47% of our citizens to pay no federal income tax while our government is drowning in debt.

Our present tax code is grossly complex, secretive, corrupt, confusing and unfair. We must replace it with a simpler law that limits the function of taxation to financing the legitimate operations of government, not to engineering social outcomes by picking winners and losers;

• Misappropriated about $3.2 trillion of Social Security and Medicare funds to pay other federal government obligations. This money must be timely repaid, thereafter to be separately held and professionally invested and administered in accordance with all the federal trust laws and powers long ignored by the congresses that enacted them;

• Employed improper accounting that massively understates federal government liabilities and prevents a complete, documented, independently audited and transparent presentation of the government’s  true financial condition;

• Authorized 175,000 pages of federal regulations, full of unfunded mandates and stealth taxation without representation, with no accessible and impartial process to fairly resolve regulatory disputes.

In summary, we need a Comprehensive Financial Management Amendment to the U.S. Constitution. And it should include the following five ingredients:

1) Prohibit deficit spending. It should limit expenditures to revenues. Deficit spend only in declared national emergencies. Repay existing debt in annual installments of $500 billion. Give the President a line item veto.

2) Simplify our 75,000-page tax code. Declare that the sole purpose of federal taxation is to finance legitimate government operations, not to engineer social outcomes or dispense tax breaks. Congress decides only two things — brackets and rates. Every citizen and every income-producing enterprise must pay some income tax. Abolish the present Internal Revenue Code.

3) Establish proper accounting. The federal government must follow generally accepted accounting to be determined by an independent Federal Accounting Standards Board established and supervised by the Financial Accounting Foundation.

Every government department and agency must undergo annual independent audits and timely publish results online. Congress will pass no law that requires or permits any accounting treatment that conflicts with generally accepted accounting principles.

4) Reconstitute our untrustworthy trust funds. Government must repay borrowings from Social Security and Medicare before reducing other indebtedness. Further, government must permanently designate Social Security and Medicare as federal trust funds. These funds must be deposited at the Federal Reserve. Neither Congress or the executive branch would be permitted to withdraw or co-mingle trust funds.

Each fund would be governed by a separate board of trustees with fiduciary responsibility to invest and administer the funds. Congress may define benefits or contributions, not both. Government must fully fund both trust funds annually as required by actuarial analysis.

5) Establish impartial administrative courts to resolve regulatory disputes. Regulations must be specifically authorized by law. Disputes must be resolved through impartial and independent administrative courts, not by the agencies creating and enforcing the regulations.

Let’s not kid ourselves. A constitutional convention and these five steps will be monumental tasks. But we have faced much worse and overcome.

For my part, I am going to do three things for as long as it takes:

• Complete my book, explaining what we must do to fix the federal government;

• Speak to as many groups possible to spread the word.

• Raise funds and secure sponsors to support these efforts.

Now is the moment in history for We The People to get this right.

An Air Force veteran and resident of Sarasota, John Ramsey is a former CFO of two large companies; former COO of a multi-state mortgage bank; and a founding shareholder of a global management consulting firm with 34 offices in 21 countries worldwide.

 

 

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