–Why even the GAO is part of the movement for economic ignorance.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.

Excerpt from a March 1, 2011 article in the “Federal Eye” by Ed O’Keefe, titled: “Government overlap costs taxpayers billions, GAO reports”

. . . according to a Government Accountability Office report released Tuesday. The U.S. government has more than 100 programs dealing with surface transportation issues, 82 monitoring teacher quality, 80 for economic development, 47 for job training, 20 offices or programs devoted to homelessness and 17 different grant programs for disaster preparedness. Another 15 agencies or offices handle food safety, and five are working to ensure the federal government uses less gasoline.

“Reducing or eliminating duplication, overlap, or fragmentation could potentially save billions of taxpayer dollars annually and help agencies provide more efficient and effective services,” the GAO said. Merging or terminating operations as recommended in the report could save up to several billion dollars.

You who understand Monetary Sovereignty are aware that taxpayers do not pay for federal spending. In fact, there is no relationship between federal taxes and federal spending (unlike the situation with monetarily non-sovereign governments, where taxes do pay for spending.) By using the words “taxpayer dollars,” the GAO demonstrates it does not understand the realities of federal finances. If you think this is amazing, bordering on the impossible, for the Government Accountability Office, not to understand federal finances, you may be right.

Without subscribing too deeply into conspiracy theory, one might conclude the GAO actually does understand, but has an axe to grind. Consider their decision to use the word, “taxpayer.” Why do they refer to “taxpayer dollars,” rather than just to “dollars”?

Clearly, they are attempting to make the point appear more shocking. We are not the government, but we all are taxpayers. So spending government dollars would not seem nearly as serious as spending yours and my (aka “taxpayer”) dollars.

According to the GAO website:

The U.S. Government Accountability Office (GAO) is known as “the investigative arm of Congress” and “the congressional watchdog.” GAO supports the Congress in meeting its constitutional responsibilities and helps improve the performance and accountability of the federal government for the benefit of the American people. The agency examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other data to help Congress make informed oversight, policy, and funding decisions. GAO’s commitment to good government is reflected in its core values of accountability, integrity, and reliability.

We all know Congress loves to point with pride and view with alarm, and the GAO gives them the opportunity to do both. The GAO works for Congress and its purpose is to give Congress ammunition to criticize, and this ammunition is based on the believing federal dollars are limited, so must be used “efficiently” (i.e. minimally). Since, in fact, Monetarily Sovereign federal dollars are not limited, but taxpayer dollars are limited, referring to “taxpayer” dollars provides Congress with much greater alarm for viewing.

Now, consider this GAO press release:


WASHINGTON (December 21, 2010) – The U.S. Government Accountability Office (GAO) cannot render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations.

“Even though significant progress has been made since the enactment of key financial management reforms in the 1990s, our report on the U.S. government’s consolidated financial statement illustrates that much work remains to be done to improve federal financial management. Shortcomings in three areas again prevented us from expressing an opinion on the accrual-based financial statements,” said Gene Dodaro, Acting Comptroller General of the United States.

The main obstacles to a GAO opinion were: (1) serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.

[. . . ] Dodaro also cited material weaknesses involving an estimated $125.4 billion in improper payments, information security across government, and tax collection activities. He noted that three major agencies—DOD, the Department of Homeland Security, and the Department of Labor—did not get clean opinions.

Not only does this report provide Congress with plenty of ammunition to view with alarm, but more importantly (for the GAO), it demonstrates the importance of the GAO. One almost can hear Congress sighing, “Thank God for the GAO.”

In short, it is in the GAO’s interest to make its reports seem as troubling as possible. The more grim its revelations, the more likely will the GAO receive increased funding, and the more likely will Comptroller General, Gene L. Dodaro, not only keep his job, but be hailed by Congress as a true guardian of the public domain. Imagine Mr. Dodaro coming before Congress and saying, “Everything is O.K.” They’d boot him out of town.

So why should Mr. Dodaro state concern about federal dollars, when the federal government has the unlimited ability to create dollars? Who cares about saving something that is endlessly available? Better he should talk about “taxpayer” dollars, and give the (false) impression innocent Americans are being injured by federal spending.

The myth of federal deficits and debt benefits so many vested interests, is here any wonder the plain facts are ignored?

Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth.


4 thoughts on “–Why even the GAO is part of the movement for economic ignorance.

  1. GAO’s report is only a small snapshot of how big our government really is. Programs and after program produce nothing. For example, no one in the federal government raised an issue about the housing bubble. Of maybe a few might have mentioned a possible issue, but with 7 agencies overseeing housing, not one made it an issue until it melted down. Now we around agencies trying to fix what won’t be fixed by the government. You see giving people who can’t produce anything free money and then telling go out and spend spend spend will only have one possible good outcome and that is stagnation. Japan has been printing money since their housing bubble burst in the early 90s and have been stagment ever since. Basically government spending and government ability to produce as much money as they want is nothing more than Money for Nothing.


  2. Yes, government programs produce nothing — oh, except for roads, bridges, weapons, vaccines, R&D in hundreds of sciences, homeland security, and then there’s support for education, farmers, areas devastated by floods, fires, windstorms and the seniors, the sick and the poor and thousands of other valuable projects. And then there are the national parks and the national oil reserve and space exploration. Aside from that, as you say, government programs do nothing.

    And who are those “people who can’t produce anything”? Are you one of them? If so, you surely will reject any federal support such as Social Security and Medicare or Medicaid.

    But feel free to ignore the fact that every depression and most recessions came on the heels of reduced deficit growth, and all depressions and recessions were cured with increased deficit growth.

    Its fun to hate big government until you need something. The Tea Party is starting to learn this lesson. I’m waiting for all the Tea Party members to reject Social Security.

    Rodger Malcolm Mitchell


  3. hiscross,

    I’m not sure what you mean by “looter of freedom and the open market,” but I disagree with the Democrats as well as with the Tea Party (formerly known as the “Republicans.”) Neither party has demonstrated any understanding of Monetary Sovereignty, the only difference being the Tea Party is meaner.

    Rodger Malcolm Mitchell


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