Why the Citizens of Tennessee Are Working Harder & Getting Less

by
Catherine Austin Fitts
Catherine@solari.com

In June 2001 the Senate Governmental Affairs Committee, under the leadership of Senator Fred Thompson (R- Tenn.), published its study, “Government at the Brink.” [1] The study describes the failure of federal government agencies to maintain reliable financial systems and/or to publish required independent annual audited financial statements. The President’s initial 2002 budget (before increases for 9-11) proposed that approximately 85% of all federal appropriations be awarded to the very same agencies the Thompson study states either (a) fail to maintain reliable financial systems, (b) fail to publish trustworthy or, in some cases, any, independent certified financial statements (as required by law), or both. [2]

What this means is that the citizens of Tennessee are paying an average of $5, 175 per person in federal taxes[3] of which $4, 472 is appropriated by our Congressional representatives to agencies and their outside contractors who fail to account for use of our money[4]. In other words, most federal agencies and their contractors are not held accountable for performance, raising the question what the people of Tennessee are getting for their significant investment in taxes paid to the U. S. Treasury and collected by the Internal Revenue Service (IRS). While government agencies thumb their noses at laws requiring accountability, we spend enormous amounts of time and energy providing the IRS with accurate and complete annual financial reports on ourselves. Is our Federal government not to be held accountable to the same standards or rigorous financial reporting requirements as we the taxpayers?

Every year, Congressman Steve Horn (R-Calif.), Chairman of the House Government Reform subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations [5] issues a report card regarding attempts by federal agencies to produce reliable annual audited financial statements.

Congressman Horn’s Financial Management Report Card

Agencies Rated D or F, Fiscal Year 2001 (Ended 9/30)

D+
=============================
Environmental Protection Agency
Small Business Administration

D
=============================
Department of Health and Human Services
Department of Housing and Urban Development
Department of the Interior
Department of Veterans Affairs

D-
=============================
Department of Commerce
Department of Education
Department of the Treasury
Nuclear Regulatory Commission
Department of Justice
Department of State
Department of Transportation
Agency for International Development

F
=============================
Department of Agriculture
Department of Defense
Federal Emergency Management Administration
National Aeronautics and Space Administration

Other reports from sources like agency inspectors general and government whistleblowers charge that the problems are much deeper than mere accounting: they allege stolen and missing inventory (planes, tanks, etc.) and in some cases actually admit that they rely on black budget funding (i.e., funding that is “off balance sheet” and not subject to Congressional oversight). The existence of such reports requires that we ask whether the very government officials and contractors who are paid handsomely to protect and manage our resources in accordance with the law are looting the federal government.

Total undocumented accounting adjustments for reported periods for the Department of Defense (fall of 1997 to date) amount to a whopping $3.3 trillion, or $11,700 for every American. (Many American families don’t even have $11,700 in savings in their bank accounts.) The Department of Defense has failed to produce independent audited financial statements since the requirement went into effect in 1995. HUD’s Inspector General refused to certify HUD’s fiscal 1999 financial statements. Since both agencies have refused to explain the undocumented adjustments in adequate detail for some years and declined to report or make public undocumented adjustments, we have no evidence to document that large amounts of assets or money are not being stolen. [6]

In the summer of 2000, as the former Assistant Secretary of Housing – Federal Housing Commissioner and former contractor to HUD, I visited offices of the Senate Appropriations subcommittee for HUD. [7] While there, a senior staff member of the Chairman of the subcommittee asked me what was going on at HUD. When I deferred, this staffer said, “HUD is being run as a criminal enterprise.”[8] The US Treasury, the Department of Justice, the New York Federal Reserve as depository and some or all of the major HUD contractors would have to be complicit if this charge is true. If they know what is going on at HUD and do nothing to stop it, then they are complicit! (Do we have a case of racketeering under the RICO criminal statutes?)

I subsequently communicated this situation to the Tennessee staff for my Congressional delegation. In response, one staff member advised me to “stop trying to save the world.” Later that year, all three members of my delegation, Senator Fred Thompson, Senator Bill Frist, and Congressman Ed Bryant, voted “yes” to a $1.7 billion increase in HUD’s budget. Letters from my attorney to Senator Thompson regarding HUD and from me to all Congressional representatives regarding growing criminal influence in government went unanswered. (Their inaction and their lack of response, suggest guilt and complicity. It’s much the same as a person involved in an auto accident when a pedestrian is run down and they flee the scene. They are usually suspected of being involved in a “hit and run.”)

In response to an invitation from the Hardeman County Republican Party, I had the opportunity to attend a presentation with friends and neighbors given by Congressman Van Hilleary (R-Tenn.) at the offices of the First South Bank in Bolivar. Congressman Hilleary presented his qualifications to serve as our next Governor of Tennessee, stressing his qualifications to bring financial responsibility and accountability to Tennessee state government. During questions and answers, Congressman Hilleary confirmed that he was aware that there was $3.3 trillion missing at the DOD and HUD. I asked him what he had done to figure out what money is gone and how we can get it back. I explained that getting our money back is the only way to make sure more money doesn’t disappear in the future. His response was that he was only one of more than 400 members of the House of Representatives and that there was really nothing he could do. When I returned home, a visit to Congressman Hilleary’s website confirmed that he is in fact one of a much smaller group who serves on the House Armed Services and Budget Committees and he strongly supported the $48 billion increase in our military budget without so much as a contingency placed on such spending to require compliance with the laws that regulate agency financial management.

Why is this situation relevant to my family, friends and neighbors in Hardeman County, Tennessee during this election season? (And indeed relevant to the other 49 states and 3,066 counties in this great country.) Recent Bureau of Economic Analysis statistics indicate that the average American citizen has revenues of approximately $31, 817, expenses of $37, 118 and is financing day-to-day living expenses by liquidating assets and borrowing approximately $5,301. Meantime, corporate assets continue to rise as citizens’ assets decline. This trend has remained unchanged for the last few years.

What that means is that the amount of assets we have to sell or borrow to make ends meet is about the same as the amount we are paying to the federal government, most of which is disappearing down a federal “black hole.” Meanwhile, Washington confers even more contracts and special benefits upon private companies like those managing the accounting and information systems at HUD and DOD and supports inside deals for companies like Enron. Indeed, many of the companies that run HUD were intimately involved with Enron. Yard sales, car sales, small business bankruptcies and mortgage and consumer debt defaults increase as ordinary men and women throughout Tennessee try to foot the bill.

I believe that Tennessee’s pro rata share of the “missing money” is more than enough to fund any increased budget needs here in Tennessee. Rather than imposing a state income tax or increasing individual state taxes, why not simply fund any state deficits with our portion of recaptured resources that were lost or stolen by the federal government? Indeed, why not lower state and federal taxes. Based on many years of managing and reengineering private and government funds and cleaning up billions of Iran Contra, S&L and HUD financial fraud, it is possible to reengineer federal budgets on a local level in a manner that could lead to a much lower tax and debt burden.

The campaigns and elections this year offer a unique opportunity for the citizens of Tennessee —as well as the other 49 states of the U.S. — to ensure that we only pay taxes that are used for lawful and economic purposes. We can demand a return of amounts paid to defaulting government contractors and the profits of fraud and crime — whether by corporations or in government — to fund current budgets.

It is time to get our money back to fund state and local needs rather than consider tax increases and to ensure local control and accountability for our resources. Our federal representatives are paid to serve us. If they fail to observe their legal mandates, we need to vote them out and vote in people who can. It is also time to ask our local representatives to take the steps that they can to get our missing federal tax dollars back.. But let’s not stop there. It is time to ask our local tax attorneys, judges and accountants what legal steps can be taken to establish judgments and set asides, escrow tax payments or to ask the courts to condition appropriations on compliance with the law. It is time to insist that all government contract budgets and contracts be fully disclosed and web accessible so that we can see whether the same corporations and banks that have devastated private savings are also responsible for raiding our public assets and savings and failing to perform on their contracts.

Long ago, when Americans tossed bales of British team into Boston Harbor, the slogan was, “No Taxation without Representation!” Now the new slogan should be: “No Taxation without Transparency and Accountability!”

May 22, 2002
Hickory Valley, Tennessee

NOTES:

1. http://www.senate.gov/~gov_affairs/issues.htm

2. Wasted Riches, by Kelly Patricia O’Meara, Insight Magazine, October 22, 2001, http://www.insightmag.com/main.cfm/include/detail/storyid/108588.html

3. Based on IRS 1999 collections of individual taxes.

4. Wasted Riches, by Kelly Patricia O’Meara, Insight Magazine, October 22, 2001, http://www.insightmag.com/main.cfm/include/detail/storyid/108588.html

5. http://www.house.gov/reform/gefmir/index.htm

6. The War on Waste, CBS News, (January 29, 2002) http://www.cbsnews.com/stories/2002/01/29/eveningnews/main325985.shtml ; Rumsfeld Inherits Financial Mess by Kelly Patricia O’Meara, Insight Magazine, September 3, 2001. http://www.insightmag.com/main.cfm?include=detail&storyid=139530

7. Bio, see http://www.solari.com/about/ca_fitts.html

8. In support of the Senate staffer’s position, see The Myth of the Rule of Law, by Catherine Austin Fitts, SRA Quarterly, London, November 2001, http://www.solari.com/gideon/q301.pdf HUD’s outside contractors include Lockheed Martin, DynCorp, AMS, JP Morgan-Chase, Arthur Andersen and Harvard.