Statement and Account Clause & Appropriations Clause Explained

291 Pages·2016·6.6 MB·English

by  Joe Marren

#4 Joseph Marren Individual
Statement and Account Clause & Appropriations Clause Explained

“A Nation cannot plunder its own treasury
without putting its Constitution and its
survival in peril.” Justice Anthony M. Kennedy
Memorandum to:
Federal Accounting Standards Advisory Board,
Legislative Branch
Speaker of the House of Representatives Paul Ryan,
House Minority Leader Nancy Pelosi,
Senate Majority Leader Mitch McConnell,
Senate Minority Leader Harry Reid,
Senator Charles Schumer,
Senator Elizabeth Warren,
All other Members of Congress,
Comptroller General Gene Dodaro,
Executive Branch Officers, Presidential Candidates and Selected Officials of Agencies of the Federal Government
President Barack Obama,
Candidates for the Office of President of the United States
Secretary of the Treasury Jacob Lew,
Director of the Office of Management and Budget Shaun Donovan,
Commissioners of the Securities and Exchange Commission,
Chief Accountant of the Securities and Exchange Commission James Schnurr,
Governors of the Federal Reserve System,
U.S. Attorney General Loretta Lynch,
U.S. Attorney for the Southern District Preet Bharara,
Office of Legal Counsel Principal Deputy Assistant Attorney General Karl Thompson,
Director of the Federal Bureau of Investigation James Comey,
Secretary of Defense Ashton Carter,
Judicial Branch
Chief Justice and Associate Justices of the Supreme Court of the United States,
Chief Judge of the U.S. District Court for the Southern District of New York Loretta Preska,
U.S. Circuit Judge for the Second Circuit Denny Chin,
U.S. District Court Judge for the Southern District of New York Cathy Seibel,
State Governments
Governors of All Fifty States, Puerto Rico and Other U.S. Possessions,
Legislatures of All Fifty States, Puerto Rico and Other U.S. Possessions,
Attorneys General of All Fifty States, Puerto Rico and Other U.S. Possessions
Accounting Profession
Board of Trustees of the Financial Accounting Foundation,
Board of Directors of the American Institute of Certified Public Accountants,
Governmental Accounting Standards Board,
General Counsel and Outside Counsel of All Accounting Firms,
Media and the Ratings Agencies
The New York Times, Wall Street Journal, Washington Post and All Other Media
General Counsel and Outside Counsel of All Ratings Agencies

Joseph H. Marren, J.D., MBA, CPA (Inactive),
Concerned Citizen
September 13, 2016

Notes: The views expressed by Mr. Marren do not represent the views of KStone Partners LLC or any of its other Members. The approach and discussion in this memorandum supersedes all prior publications by the author. End notes for this
“working draft” document have not been completed.
#4 Joseph Marren Individual
#4 Joseph Marren Individual

This memorandum is dedicated

To my brother David Stack Marren
In 2007 Dave was diagnosed with a rare neurological disease
Primary Lateral Sclerosis (“PLS”)
Readers that find this memorandum helpful or informative are urged to make a
tax-deductible donation to fund PLS research at Columbia University Medical Center
Please make checks payable to “The Trustees of Columbia University” and indicate
“David S. Marren PLS Research Fund” in the check’s memo line and mail to:
Columbia University Medical Center
Office of Development – attn: Matt Reals
100 Haven Avenue, Suite 29D
New York, NY 10032

And

To the memory of my father
Bernard Dominic Marren, JD, CPA,
a former Special Agent of the Federal Bureau of Investigation,
a graduate of Fordham University and
Fordham University School of Law
#4 Joseph Marren Individual
#4 Joseph Marren Individual
Summary Table of Contents
One Page Executive Summary
Executive Summary
1. Introduction
2. All Federal and State Financial Reporting are “Pure Applesauce”
3. Why it Matters to All Americans
4. Processes By Which GAAP Is Set Are Unconstitutional
5. Perpetual Fraud on Federal and State Judiciaries
6. Federal and State Governments Actual Financial Results - A Closer Approximation
7. Where are Congress and the Governors of the Federal Reserve?
8. Is the Accounting Industry Complicit in a Political Protection Racket?
9. Tax Expenditures
Appendices
I. Overview of the American Institute of Certified Public Accountants
II. Overview of the Financial Accounting Foundation and Governmental Accounting
Standards Board
III. Additional Historical Background
IV. Other Publications by the Author
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#4 Joseph Marren Individual
Detailed Table of Contents
One Page Executive Summary
Executive Summary

1 Introduction
A. An Informed Electorate is Key to Our Democracy
a. Right to Financial Information is Written into Our Constitution
B. Why Have Federal and State Politicians Under-Reported Spending?
a. Federal Government Keeps Three Sets of Books
b. Federal and State Finances Have Been in Bad Shape for a Long Time
c. Reporting Requirements Have Changed Since Constitution Adopted
C. Congress Has Abdicated Its Financial Reporting Responsibilities
D. Numerous Attempts to Fix the Problem Have Failed
a. No Political Will Exists to Fix the Problem
E. There Never Will Be a Happy Ending to the Problem
F. U.S. Supreme Court Must Restore the Rule of Law
a. Politicians Believe That SCOTUS Will Never Address the Issue
G. Key Assumptions
H. Overview of the Federal Government’s Financial Reporting
a. Three Reports are Key
b. Federal Government Fraudulently Reports Three Major Items
c. Combined Statement of Receipts, Outlays and Balances
d. President’s Budget
e. Financial Report of the United States Government
I. Acknowledgements

2 All Federal and State Financial Reporting are “Pure Applesauce”
A. The Federal Government’s Fraud
a. When is “Money” Not “Money”?
b. “Obligations” and “Liabilities” Defined Under the Appropriations Clause
c. Congress/GAO Create Alternate Universe for Permanent Appropriations
d. “Liability” Redefined for Financial Reporting Purposes
e. SCOTUS Must Determine the Meaning of the Two Clauses
f. Antifraud Provisions are Inherent in the Statement and Account Clause
i. Matrixx Initiatives v. Siracusano
g. Congress Does Not Have Plenary Power with Respect to the Statement
and Account Clause
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B. The State Government’s Fraud
a. States Accounting for Medicaid Violates the Antifraud Provisions
b. SEC Has Found Three States Violated the Antifraud Provisions
c. State’s Medicaid Obligation is Nine Times the Size of the Municipal
Securities Market

3 Why it Matters to All Americans
A. Right to Financial Information
a. Historical Background
i. Impact of French and English Accounting on the Framers
ii. Congress Had Bankrupted the Nation
iii. Constitutional Convention
iv. Commentary Regarding Statement and Account Clause
v. Statements by Early Presidents
b. The Right is Not a Matter for Legislative/Executive Discretion
B. Freedom of Speech
a. FEC v. Citizens United
C. Right to Vote
D. Political Accountability
a. New York v. United States
b. SCOTUS Should Not Show Any Deference to Congress
E. Equal Protection
F. Due Process
a. Caperton v. A.T. Massey Coal Co.
b. Psychological Factors Affecting Financial Reporting
c. The Lesson of Caperton

4 Processes By Which GAAP Is Set Are Unconstitutional
A. Process By Which the Federal Government Sets GAAP is Unconstitutional
a. Budget and Accounting Act of 1921
b. Budget and Accounting Procedures Act of 1950
c. 31 U.S.C. 3511
d. Congress Cannot Delegate Law Making Authority to the Comptroller
General
i. The Comptroller General Formed FASAB in 1990
ii. Bowsher v. Synar
iii. Comptroller General’s Testimony before Committee on Government
Operations, House of Representatives on Bowsher v. Synar
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iv. What Do Former Comptroller Generals Believe?
v. FASAB is an Advisory Board
e. Executive Branch Has Poached Congress’ Financial Reporting
Responsibilities
B. The Federal Government’s Cover-up
a. Accounting for Entitlement Programs
b. Where are the Social Security and Medicare Trust Funds?
C. Process by which GAAP is Set for State Governments is Unconstitutional
a. Important Facts Impacting State and Local Government Financial
Reporting
b. Dodd-Frank Section 978 Funding for GASB
c. Process Required When Congress Wants to Make Policy That Binds the
Nation
d. Structural Protections are Critical for Our Democracy
e. Dodd-Frank Section 978 Exceeds the Power of the Purse
f. Department of Transportation ET AL v. Association of American
Railroads
i. Lebron v. National Railroad Passenger Corp.
ii. Justice Alito’s Concurring Opinion
g. Differentiating Delegation of Licensing Powers to a Private Group
D. The State Governments’ Cover-up
a. State Accounting for Medicaid

5 Perpetual Fraud on the Federal & State Judiciaries
A. Standing and the Political Question Doctrine
a. Violation of the Right to Financial Information Should Create Standing
B. Review of Two Obamacare Cases
C. Reported Financial Status of the Federal Government Pre- and Post-ACA
a. Reported Financial Status of Federal Government and Social Insurance
Pre-ACA
i. Overview
ii. 2009 Financial Report of the United States Government
Adjustments to Consider for Reported SOSI Figures
Limitation for Appropriated Funds
SOSI and Appropriated Funds
Adjustment for Physician Payments
Permanent Appropriations Do Not End at 75 Years
SOSI Infinite Horizon and Appropriated Funds
#4 Joseph Marren Individual
GAO’s Conclusion in 2009 Financial Report
b. Reported Financial Status of Federal Government & Social Insurance
Post-ACA
i. Medicare Post-ACA
ii. 2010 Financial Report of the United States Government
Adjustments to Consider for Reported SOSI Figures
Medicare Trustees’ Alternative Scenario
Limitation for Appropriated Funds
2010 SOSI and Appropriated Funds
Permanent Appropriations Do Not End at 75 Years
SOSI Infinite Horizon and Appropriated Funds
GAO’s Conclusion in 2010 Financial Report
c. Reported Financial Status of Medicaid Pre- & Post-ACA
i. Overview of Medicaid
ii. Medicaid Has Permanent Appropriations
iii. SCOTUS on Medicaid
iv. Revelation Provided by SFFAS No. 36
Adjustments to Consider for Reported Medicaid Figure
No Alternative Scenario is Published for Medicaid
Permanent Appropriations Do Not End at 75 Years
v. State’s Aggregate Obligation for Medicaid is Enormous
Medicaid Obligations Exceed $1 Trillion for Five States
D. Medicaid Expansion Issue in NFIB v. Sebelius
a. Chief Justice Roberts Questions General Verrilli
b. Conclusion on NFIB v. Sebelius
E. King v. Burwell
a. Supreme Court Should Have Looked at All of the Facts
b. Facts are Clear that There Cannot Have Been a Contract
F. Conclusion: Words of Wisdom from Justice Kennedy

6 Federal and State Governments Actual Financial Results - A Closer Approximation
A. The President’s Budget
B. The 2015 Financial Report of the United States Government
a. Statements of Social Insurance in 2015 Financial Report
b. Statement of Long-Term Fiscal Projections in 2015 Financial Report
c. Results per Financial Reports for 2006 Through 2015
i. Adjustments to Consider for Reported SOSI Figures
Medicare Trustees Alternative Scenario