Monthly Archives: April 2018

The Federal Government and The Fraud Triangle

E-Newsletter No. 52 _____ April 2018

As we have noted on our Foundation’s website, our Editorial Board tends to approach many of our country’s issues from a “business” perspective, rather than a “political” perspective. In the business world, the management of a company has a fundamental responsibility to guard against occupational fraud.

Dr. Donald Cressey was a criminologist who developed a fraud triangle model that identified three factors that, when taken together, can contribute towards a person committing an act of fraud – Pressure, Opportunity, and Rationalization. Do these same three factors come into play in politics?

Pressure – A potential opponent from within your own party in the next primary election, an opponent from the other party in the next general election, the need to deliver results to your various special interest groups so they will continue to provide campaign contributions for your next re-election, etc…. But maybe the biggest pressure is your own desire to maintain your current lifestyle and the sense of power that comes from your position within the federal government. The question becomes – Wouldn’t these pressures on the members of the House and Senate be significantly reduced if they knew they had been elected to serve a limited number of years, so that they can devote all of their time and efforts towards promoting the general welfare of the country as a whole, rather than worrying about their next re-election?

Opportunity – Congress’ approval ratings are at historical lows, and yet over 96% of the incumbents in the House and Senate who sought re-election in 2016 were successful in getting re-elected. It is a well-known fact that incumbents have a tremendous advantage over any challengers – – name recognition, a built-in fund-raising advantage, along with the continued support they receive from their various special interest groups. However, the single biggest opportunity that members of Congress have in regards to spending our children’s /grandkids’ money is that they can’t vote yet.

Rationalization – The Scottish historian Alexander Tytler observed that “A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy.” But aren’t politicians simply giving their constituents what they want from the government? Isn’t this why we have Social Security, Medicare, Medicaid, Obamacare, and Welfare programs? Isn’t this the primary role of the federal government? [ No ].

Our Editorial Board promotes the concept of Personal Responsibility, rather than yet another government program. We oppose Socialism and Big Government. Winston Churchill observed “The inherent vice of Capitalism is the unequal sharing of Blessings. The inherent virtue of Socialism is the equal sharing of Miseries.” Margaret Thatcher observed that “The problem with Socialism is that you eventually run out of other people’s money.” Our federal government ran out of other people’s money a long time ago (which is why our federal government is already $21.1 trillion in debt, thanks to FDR, LBJ and the other Big Government Socialists). When you run out of other people’s money, you are almost forced to go after the money of people who can’t even vote yet.

We started this newsletter with an observation that in the business world, the management of a company has a fundamental responsibility to guard against occupational fraud (and Ponzi schemes). Our country’s Founders set up a government where We-the-People are the managers over our elected officials. The time has come for We-the-People to exercise our management responsibilities and call a Convention of States to propose amendments to the US Constitution that would impose fiscal restraints on the federal government, limit the power and jurisdiction of the federal government, and limit the terms of office for its officials and for members of Congress.

US Debt Clock – – March 1st – $63,450 per citizen / April 1st – $64,468