Skip to comments.Which is worse: WorldCom or Congress?
Posted on 07/02/2002 9:50:08 PM PDT by kattracks
President Bush said he was "deeply concerned" about some of the accounting practices in corporate America and called "outrageous" the disclosure that WorldCom, which is $32 billion in debt, had hidden $3.8 billion in expenses.
The president added, "We will fully investigate and hold people accountable for misleading not only shareholders but also employees."
The Securities and Exchange Commission (SEC) filed fraud charges against the nation's No. 2 long-distance telephone company, as the company slid toward bankruptcy. WorldCom is being called the biggest case of crooked accounting in U.S. history, where it hid nearly $4 billion worth of expenses from investors in order to make its bottom line look good. But is WorldCom really America's biggest case of accounting gimmickery and deception? I don't think so.
Ask the president or any congressman: How much debt does the federal government owe? Nine will get you 10 that they'll tell you that it's $3.5 trillion. If they had just a tad of sophistication or honesty, they might add intragovernmental debt that'd bring the "total debt" to slightly more than $6 trillion. Even that figure represents a level of creative accounting, deception and lies that make the actions of Enron and WorldCom seem like child's play.
Washington's deception about federal debt can be found in a report by Andrew J. Rettenmaier, a senior fellow at the Dallas-based National Center for Policy Analysis, titled, "How Big Is the Government's Debt?" Rettenmaier says that, as of 2001, the accumulated federal obligations to all people who've earned Social Security and Medicare benefits are $12.9 trillion for Social Security and $16.9 trillion for Medicare. Combined with the public and intragovernmental debt, the total federal debt burden is an unimaginable $35 trillion. That amounts to roughly $120,000 for every man, woman and child in America.
It will be impossible for the government to pay that kind of debt. Washington will do what all governments do when it cannot make good on its debt. Congress will repudiate agreements with creditors by refusing to pay on agreed-upon terms or choose government's traditional method of repudiation -- inflating the currency.
There's no question that both Enron and WorldCom engaged in deceptive and dishonest practices -- in a word, fraud. Here on Earth, there'll never be the end to deceptive and dishonest practices, notwithstanding supposed protection by the SEC. We're going have to wait until we get to heaven for total honesty. But let's compare what happens when deceptive accounting practices are discovered in private industry versus when they're discovered in government.
Without the SEC, the supposed guarantor against corporate hanky-panky, lifting one finger, the market has exacted high penalties. Enron and WorldCom shares of stock and their reputations are virtually worthless. Heads have rolled.
By contrast, what happens when Congress cooks the books and deceives Americans into believing that government debt is $3.5 trillion or $6 trillion, when it's really $35 trillion? Absolutely nothing.
I bet that if you brought this up to one of our Washington politicians, he'd say: "That Williams guy doesn't know what he's talking about. What we owe to Social Security and Medicare recipients is not debt."
Of course, Enron and WorldCom might get out of their troubles by redefining what debt is as well -- but the economic arena, unlike the political arena, doesn't play that.
Contact Walter Williams | Read his biography
©2002 Creators Syndicate, Inc.
But we should expand the blame game to include corruption in ALL of government, which certainly dwarfs anything in the private section. Include all of the lying politicians from every level of government, clerks who have stolen public money, policemen who abused their authority and both planted and stole evidence, then sold it; nurses and doctors who have killed instead of healed, and perpetrators of affirmative action everywhere.
Add to the list government firefighters who set forest fires, and Government environmental employees whose policies ensure that the forests are not wasted by harvesting trees. Let the trees burn instead. Also, the swarm of public sector criminals who harass anyone who makes a dollar more than they do, or who benefit by prior planning, hard work, and personal initiative.
Oh, and we mustn't forget all the media swine across the country who each day corrupt the news to fit their preconceived notions.
This "blame the companies" game opens up brave a new vista of unintended consequences.
Well it can't be the House because Republicans have a majority there and they certainly wouldn't "cook the books" ignoring the little guy for their own political gain ...would they?...
Gee, if we just had a few more RINO's in the Senate that would give us a majority...but wait that's not good enough either. We need 60 Republicans to make it filibuster proof....Wait, of those 60 we can't have even one Rino and there'd be at least 15....I know we need 100 Republican Senators (only 40 can be RINO's), 435 Republican House members and a REAL Republican (if we can find one) for the President...THEN watch the fur fly.
CONGRESS........The Founders would be very mortified!!!!
"By contrast, what happens when Congress cooks the books and deceives Americans into believing that government debt is $3.5 trillion or $6 trillion, when it's really $35 trillion? Absolutely nothing."
Tough call. Kind of like asking who is worse, bin Laden or Arafat.
My Congressman is Cynthia McKinney, so based largely on that, I'd have to say Congress is worse than World Com. At least with World Come you don't have to buy its stock, and have some choice in the matter.
It is often noted that the government debt grew substantially during the presidency of Ronald Reagan. This statement is misleading. The explicit public debt did increase between 1980 and 1988 - from 26.1 percent of Gross Domestic Product (GDP) to 40.9 percent. However, based on the alternative measure of Social Security's unfunded obligations, over the same period implicit Social Security debt actually fell - because of the reforms adopted in 1983. As a result, the combined Social Security and explicit government debt fell from 232 percent of GDP in 1980 to 157.5 percent of GDP in 1988. Thus the combined government debt was reduced by 32 percent - almost one-third - during Ronald Reagan's term in office.
During the presidency of George H.W. Bush, the combined debt rose from 156.3 percent to 172.08 percent of GDP. By the end of the Clinton presidency, in 2000, the combined debt had fallen to 135.52 percent of GDP.
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