What’s All The Fuss About?

It all started when I began to write a little accounting primer for my young adult friends, including my nieces and step-daughter, about the reality of the U.S. financial environment.  I wanted to encourage them to learn to research issues from the source instead of listening to their peers, political and economic commentators, and the “older generation.”  I mean, how bad can it really be?  Everyone is spending like crazy, new shopping malls appear quarterly, the real estate market is still doing pretty well, interest rates are low.  And finally, I hoped to alleviate any misunderstandings that their lack of knowledge of accounting might generate by showing them that reading a financial report is not beyond their ability.

         As I began to search for raw data about the finances of the U.S. Government, I was amazed how easy the internet made the exercise.  Basically the U.S. Treasury Department issues financial statements and the GAO audits them.  Furthermore you can find sets of data for each department of the federal government on their own web sites and the Economic Bureau of Analysis in the U.S. Department of Commerce provides most of the remaining numbers for anything anyone would ever want to know.  Lots and lots of numbers.

         When I wandered through multiple federal government web sites, I stopped at Treasury and plucked the financial numbers representing the highest overview possible so that I could start at the top and look down.  I found the raw data that I sought but it had absolutely no analysis attached to it, not even the simple calculation of “percent change” from one year to the next.

         What I discovered made me very uneasy.  Not only were the numbers horrific when analyzed simply, but they were un-audited.  For those without an accounting background, "audited"  means “reviewed and validated.”   David Walker, the U.S. Comptroller General of the United States, issued a “Disclaimer of Opinion” for the 2005 financial statements provided by the US Treasury Department and an “Adverse Opinion on Internal Controls” within federal government operations in 2005.

          And as I thought about why more Americans were not upset; why our dismal financial situation was not the priority topic of every cocktail party, at the office water fountain, and around the family dinner table; why American investors are not scrambling offshore, I realized that one of the basic reasons is that no one had ever personalized these numbers to the American public.  No one has attempted to answer the question, “what do these numbers mean to me?” 

         The federal government’s situation is transparent;  it is there for everyone to see.  But the essence of the information is hidden in a mountain of data.  Maybe it’s good that there is no analysis because when you start transferring the raw data to spreadsheets and then adding the analysis columns, your eyes pop open as the trends appear!

So the goal of my little accounting primer changed from opening my niece’s eyes by taking a snapshot of the US financial situation using the federal government’s own basic numbers to writing a friendly, folksy treatise designed to

·        identify where we are now (Point A:  insolvency),

·        define the financial environment we need in the future (Point B:  balanced budget, efficient structure, auditable fiscal operations),

·        reflect on the world sandbox that we play in to show how we are currently constrained as our markets are contracting while the rest of the world is expanding (Here comes the World!)

·        discuss what history shows us will happen if we wait for an uncontrolled market correction similar to the one that Asia experienced in 1997 (The Crisis)

·        recommend at least one way to get from Point A to Point B in a controlled fashion (The Journey) 

·        explain in very personal terms why each and every American, taxpayer or not, should be transformed into a non-violent political activist within our existing two party structure because we simply don’t have time to use any other process

·        offer methods which allow the American people can complete their own research, make their own evaluations, and take the responsibility to control of their own future

·        suggest methods to broadcast the message

Now it's time for some peer review by folks in my inner circle who will, hopefully,

·        validate the sanity of my analysis,

·        review the logic of my conclusions,

·        judge the practicality of my recommendations,

·        critique my writing effort,

·        suggest how to incorporate sex and humor into the manuscript,

·        evaluate this effort as worthy of future distribution or not.