[Congressional Record Volume 148, Number 76 (Tuesday, June 11, 2002)]
[House]
[Pages H3424-H3425]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1930
FEDERAL GOVERNMENT CANNOT ACCOUNT FOR BILLIONS OF TAXPAYER DOLLARS
The SPEAKER pro tempore (Mr. Jeff Miller of Florida). Under a
previous order of the House, the gentleman from North Carolina (Mr.
Jones) is recognized for 5 minutes.
Mr. JONES of North Carolina. Mr. Speaker, during the Memorial Day
break, I happened to be listening to a talk show out of Raleigh, North
Carolina called WPTF and the host is Jerry Agar. When Mr. Agar said
that the New York Post had reported that the national government, the
Federal Government had lost $17.3 billion, it kind of got my attention.
So by phone, because I was in my car, I called my staff and I said,
please get me a copy of the New York Post. I cannot believe what Jerry
Agar was saying, even though I have been on his show and I think he is
a very, very credible talk show host.
Sure enough, we got a copy of the New York Post and the article says,
``Washington complains about deceptive corporate accounting, but the
government last year misplaced an incredible $17.3 billion because of
shoddy bookkeeping, or worse.''
Then, to add to that embarrassment that we cannot keep our books
straight here in Washington, D.C., the London Times, May 29, has an
article that says, ``As accounting errors go, it is a whopper. The U.S.
Treasury has admitted that it has `lost' $17.3 billion,'' and they
equate that in pounds to $11.7 billion, ``because of shoddy
bookkeeping, enough to buy a fleet of 8 B-2 stealth bombers and still
have change for jet fuel.''
Mr. Speaker, I would like to submit these two articles and also a
letter that I have sent to Secretary Paul O'Neill.
Let me go a little bit further. In March, 2002, the Department of the
Treasury released the 2001 financial report of the United States
Government. This report included some shocking revelations about
Federal Government expenditures. Specifically, on page 110 of this
report, it is revealed that the Federal Government has unreconciled
transactions totaling $17.3 billion from the year 2001. Put simply, the
Federal Government cannot account for billions of taxpayers' dollars
that Americans paid in one fiscal year.
Mr. Speaker, as a Member of Congress, and my colleagues, I am sure,
feel the same and, more importantly, as taxpayers, I am frankly
offended by these facts. With the war on terrorism costing about $1.8
billion per month, this is not the time to be misplacing taxpayers'
dollars. As I stated earlier, and I want to state again, the London
Times said $17.3 billion is enough to buy a fleet of B-2 bombers with
spare change for fuel. Mr. Speaker, $17.3 billion is the equivalent of
two aircraft carriers and two air wings. If a company in the private
sector managed its books in a similar fashion, someone would definitely
be going to jail.
Last week, as I said earlier, I requested Secretary of the Treasury
Paul O'Neill to account for these unreconciled transactions. Mr.
Speaker, the American taxpayers look to us to be the leaders who
protect and spend their money wisely, and I think we have a
responsibility and an obligation to the taxpayers of this country to
explain to them how we lost $17.3 billion. It is unacceptable, and I am
sure my colleagues on both sides of the political aisle will feel the
way I do. We would expect an explanation to the fact that we have
misplaced and lost $17.3 billion of the taxpayers' money.
So, Mr. Speaker, I am going to close with that. But again, I do want
to submit the two articles from the London Times, the New York Post,
and my letter to Secretary O'Neill, and I do expect Secretary O'Neill
to respond with some type of explanation. If I do not get a letter in
the proper length of time, I intend to notify the committee of
jurisdiction and ask that they hold a hearing on how we as a national
government have lost $17.3 billion of the taxpayers' money. The
American people work hard for their money and they have a right for an
accountability by this government.
[From the New York Post, May 28, 2002]
Billions Lost by Feds
(By John Crudele)
May 28, 2002.--Washington complains about deceptive
corporate accounting. But the government last year misplaced
an incredible $17.3 billion because of shoddy bookkeeping, or
worse.
Let me put that into numbers so you can fully appreciate
the amount. It's $17,300,000,000--the price of a few dozen
urban renewal projects, a nice size fleet of warships or
about have the tax cut that everyone made such a fuss about
last summer. Disappeared. Gone. Nowhere to be found. In fact,
the government's accounting was so atrocious that the General
Accounting Office--another Washington agency--refused to give
an opinion about the honesty of the government's books.
Did someone steal all that money? The government doesn't
know. Was it simply misplaced? Dunno. Misspent? Your guess is
as good as anyone's.
There's a certain bit of irony, of course, that Congress is
raking companies like Enron, Arthur Andersen and others over
the hot coals for falsified books when D.C.'s own records are
pathetically inadequate.
As I mentioned in this column a couple of weeks ago, the
government made an incredible admission a little while back
in something called the 2001 Financial Report of the United
States Government.
In that report, Treasury Secretary Paul O'Neill revealed
that when the government uses the same accounting method that
corporations are required to use, the federal deficit in 2001
was $515 billion. Last fall the government said the budget
had a surplus of $127 billion.
Ah, yes, the good old days!
The huge deficit is mainly, the government says, the result
of health benefits to military retirees. That's a cost the
government conveniently forgot to include in its old
accounting method, which had more to do with winning votes
than providing a true financial picture of the country.
Anf that $515 billion doesn't include all costs, especially
Social Security. But we'll leave that alone because I don't
want to depress anyone--especially myself.
I also said in that earlier column that the information on
the deficit wasn't easy to find. O'Neill's letter was buried
on the Treasury Department's Web site and the press release
put out by the agency didn't mention the $515 billion until
paragraph 5.
(Treasury says all the press in Washington got a copy of
the report and that it was adequately disclosed. It also said
an undersecretary of Treasury had reported the numbers to a
congressional subcommittee.)
Well, I sent my scavengers back into that Financial Report
of the U.S. for another look and that's when we discovered
the unaccounted for $17.4 billion.
Follow me on this and I'll lead you to the still missing
treasure.
Go to www.USTreas.gov, click on Treasury Bureau on the
left, then click on ``financial management services.''
If you've made it this far click on ``Financial Report of
the U.S. Government'' for 2001 and download it.
Now find page 49. Look at the line that says ``Unreconciled
transactions affecting the change in net position.'' The
figure in the 2001 column next to that is $17.3 billion.
What that means is that when the accountants tried to
balanced the government's books they came up $17.4 billion
short. Note 16 on Page 110 sort of explains.
That footnote says that the accountants had to pencil in
$17.4 billion that didn't exist (or was missing) in order to
achieve a balanced government ledger.
The footnote adds that the mistake could simply be bad
government record keeping or ``improper recording of
intragovernmental transactions by agencies.''
Poor record keeping! Isn't that a gem.
I spoke with some of the folks at the General Accounting
Office who audited the government's report. They were puzzled
by the discrepancy and wouldn't sign off on the government's
accounting because of that and other things.
``The left and the right side didn't equate,'' said one GAO
auditor. When such a thing happens in the private sector,
People go to jail. And a company's stock would fall by about
99 percent if its auditor didn't trust the books--just ask
the felons-to-be down at Enron.
It is good that Washington must now adopt a corporate-like
method of accounting for where it spends taxpayers' money.
But it would be even better if there were some recourse to
the sort of sloppiness, arrogance or criminality that allows
the government to come up $17.4 billion short of balancing
its books.
At the very least, maybe some corporate exec--as he's being
hauled off to jail for accounting fraud--will hold aloft page
49 of the government's financial statement and foot note 16
and demand equal treatment.
[[Page H3425]]
____
[From the London Times, May 29, 2002]
US Government Loses $17bn in Accounting Error
(By Chris Ayres in New York)
As accounting errors go, it is a whopper. The US Treasury
has admitted that it has ``lost'' $17.3 billion (Pounds 11.7
billion) because of shoddy book-keeping--enough to buy a
fleet of eight B-2 stealth bombers and still have change for
jet fuel.
The admission, contained in the 2001 Financial Report of
the United States Government, is likely to infuriate firms
that have been targeted by the Bush Administration for sloppy
accounting.
The misplaced cash is nearly 30 times greater than the $600
million error in Enron's reported profits that led to the
Texas energy company's spectacular bankruptcy last December.
It is thought that the accounting error led to a dispute
between the US Treasury and the General Accounting Office,
which was reluctant to sign off on the report.
Paul O'Neill, the US Treasury Secretary, writes in the
introduction to the Financial Report: ``I believe that the
American people deserve the highest standards of
accountability and professionalism from their Government and
I will not rest until we achieve them.'' However, on page 110
of the Financial Report is a note that explains that the
Treasury's books did not balance because of a missing $17.3
billion.
The note says that ``three primary factors'' were
responsible: the failure of government agencies to keep
accurate books; errors in reporting various contracts between
government agencies; and problems with the timing of certain
costs and revenues.
It is not the first time that the US Treasury has been
embarrassed by the kind of accounting problems that have
spooked stock market investors. Because of new corporate-
style accounting rules for the Government, the US Treasury's
$127 billion federal surplus, reported last autumn, turned
into a deficit of $515 billion, mainly as a result of the
Government incorporating the cost of health benefits for
those retiring from the US military.
America's finances have also been strained by last year's
tax cut, the recession and increased spending after the
September 11 attacks.
____
Congress of the United States,
House of Representatives,
Washington, DC, June 6, 2002.
Hon. Paul H. O'Neill,
Secretary of the Treasury,
Washington, DC.
Dear Mr. Secretary: I write to you to bring to your
attention a serious situation regarding 2001 Financial Report
of the United States Government.
In March 2002, the Department of the Treasury released this
report to the public and included are some shocking
revelations about Federal government expenditures. As a
member of Congress and, more importantly, as a taxpayer, I am
frankly offended by these facts. Specifically, on page 110 of
the report, it is revealed the Federal government has
``unreconciled transactions'' totalling $17.3 billion from
FY2001. Put simply, the Federal government has ``unreconciled
transactions'' totalling $17.3 billion from FY2001. Put
simply, the Federal government cannot account for billions of
taxpayer dollars that Americans paid in one fiscal year.
The report provides minimal data and information regarding
these ``unreconciled transactions''. Not only is the Federal
government missing $17.3 billion, but there is no reason
given for this loss. While I appreciate the Department of the
Treasury's statement ``. . . the identification and accurate
reporting of these unreconciled transactions a priority . .
.'', the fact remains the public nor the Congress has the
requisite information on how this loss occurred.
What agencies were responsible for these ``unreconciled
transactions''? Will these transactions eventually be
reconciled? If so, what is the timeline for the
reconciliation? What agency or agencies will be responsible
for the reconciliation? Will this reconciliation be available
to the public when complete?
The Clinton Administration provided for an enormous erosion
of Americans' confidence in their government. My hope is that
these ``unreconciled transactions'' are nothing more than a
bygone relic of the previous Administration. However, members
of Congress and employees of the Executive Branch must be
accountable to the American taxpayer and my constituents are
demanding answers to these important questions.
Mr. Secretary, I believe someone must answer to the
American people for this loss of tax dollars. I look forward
to your answers regarding these ``unreconciled
transactions''. Thank you for your prompt attention to this
matter. Should you have any questions or concerns, please do
not hesitate to contact me.
Sincerely,
Walter B. Jones,
Member of Congress.
____________________