July 10th, 2012

Timely Financial Statements of Use to Voters in Federal Elections

 

In Number 32 of The New Federalist Papers, Amicus introduces our proposal for financial transparency: Amendment 5 of The Second Bill of Rights.  Currently, the fiscal year of the national government ends on September 30.  Because the national government has never adopted a double-entry form of financial accounting, the United States never balances its books, and never prepares financial statements—for itself, Congress, or for taxpayers.

Section 1 of Amendment 5 imposes on the federal government the same general requirements the national government imposes on state and local governments and on private enterprises, with a timing that is useful to voters.  Section 1 of Amendment 5 to The Second Bill of Rights establishes new obligations upon the Executive to regularly prepare and present government-wide financial statements and to require that such information be presented to shareholders (citizens) in time to be considered before election of the government’s officers and directors (Congress and the Executive).

There are three distinct parts to Section 1.  The first sentence of Section 1 changes the fiscal year to begin on April 1 and end on March 31.  The Executive has six (6) full months from the close of each fiscal year to prepare the required financial statements for presentation to Congress and the nation.

The second sentence of Section 1 requires that the President prepare and present to Congress before October 1 government-wide financial statements in the format imposed by the (independent) Government Accounting Standards Board (GASB) upon state and local governments.

The third sentence requires the President to submit to Congress before October 1 his recommended budget for the next fiscal year, in the same format.  This timing gives voters a chance to examine and consider the government’s financial performance over the previous three years and the President’s proposed budget for the coming year when casting their votes in federal elections.  Section 1 reads as follows:

“The Second Bill of Rights, Amendment 5, Section 1.

1.         The fiscal year for the federal government shall begin on April 1 and end on the following March 31.  Before October 1, the President shall present to Congress government-wide financial statements in accord with generally accepted government accounting principles for the previous fiscal year with comparisons to the prior two fiscal years, and which shall:  include a statement of net assets and a statement of activities; report all of the assets, the condition thereof, current and future liabilities, revenues, expenses, gains and losses of government; distinguish between governmental and business-type activities; and include discussion and analysis.  Before October 1, the President shall present to Congress his recommended budget for the next fiscal year, in a format consistent with the government-wide financial statements, with projected revenues, expenses, gains, and losses, changes in assets and the condition thereof, current and future liabilities, along with discussion and analysis.”

Voters are hungry for timely information regarding the current financial status of the national government, compared to the prior two years and compared to the budget proposed for the next year.  This situation is little different from that facing a shareholder asked to vote for a new board of directors, for a merger, or for an acquisition.  Voters in federal elections would like to make informed choices among candidates, one element of which may be the financial condition of the government, and a candidate’s positions on policies that affect it.

The voter who is a shareholder faces the same problem:  how to make an informed decision on the matter at hand.  The shareholder must rely in part on the information provided by the company’s management.  In the private sector, Congress has made it a civil wrong (with fines and civil penalties) or a felony (with prison and criminal penalties) not to provide timely, accurate, and complete information to the private sector shareholder or bondholder.

Amendment 5 in The Second Bill of Rights takes a giant step toward fiscal and electoral transparency and accountability.  “Do what I say, not what I do!” is no longer acceptable in a period of record debt, record deficits, the looming retirement of baby boomers, and changes in international markets.

To examine the rest of the eleven proposals we make to right the constitutional ship, get The Second Bill of Rights and The New Federalist Papers.  Click on the Book link (top right), on the Quick Link (bottom ), or go directly to Amazon:  http://www.amazon.com/gp/product/0984876405/

With malice toward none, and charity for all.

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