Brazil’s President Impeached: Could It Happen Here? Commentary
Brazil’s President Impeached: Could It Happen Here?
Edited by:

JURIST Guest Columnist Joseph H. Marren discusses the impeachment of Brazil’s President…

On August 30 Brazil’s Senate voted to convict Brazil’s President Dilma Rousseff on charges that she used improper accounting to cover-up a growing budget deficit and illegal loans from state-owned banks. A recent WSJ editorial remarked that millions of Americans are probably wondering why they cannot impeach Washington politicians for similar fiscal offenses. The question is timely in this political season and the correct answer is that federal politicians and certain executive officers can be impeached for publishing financial reports that do not adhere to the requirements of the United States Constitution.

The federal government’s budget deficits and debt are exponentially higher than what has been reported. None of the headline figures used as the basis of public discourse have any relevance to the true state of the government’s finances. The Combined Statement of Receipts, Outlays, and Balances which is the “official” Statement and Account, the President’s Budget and the Financial Report of the United States Government are the three relevant financial reports published by the federal government. Collectively and individually they make untrue statements about material facts, omit to state numerous material facts and hide material facts in footnotes.

How could this be true? It is because “Money” is not “Money” when the Executive and Legislative branches are interpreting Article I, Section 9, clause 7 of our Constitution.

“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”

The first part is called the Appropriations Clause and the second part is called the Statement and Account Clause. Different interpretations of “Liability” a key component of Money, in the two clauses are the vehicle used to perpetrate the financial reporting fraud on the American people. It must be noted that since the nation’s founding, the Supreme Court has not opined on the meaning of the Statement and Account Clause, including how it interacts with the Appropriations Clause.

The General Accountability Office’s September 2005 “A Glossary of Terms Used in the Federal Budget Process” defines “Liability” as follows:

Liability – Defined differently for obligation (or budgetary) and proprietary (or financial) accounting purposes.
Obligational (or budgetary) accounting, designed to ensure compliance with fiscal laws, is based on the concept of legal liability. A legal liability is a claim that may be legally enforced against the government. It may be created in a variety of ways, such as by signing a contract, grant, or cooperative agreement or by operation of law.
Proprietary (or financial) accounting, designed to generate data for financial statement purposes, is based on the concept of accounting liability. For federal financial statement purposes, a liability is a probable future outflow or other sacrifice of resources as a result of past transactions or events.

Thus for Appropriations purposes Liability includes all legal obligations that Congress enacts and funds with appropriations. However for Statement and Account purposes Liability specifically excludes vast amounts of legal obligations that are fully funded with appropriations. The practical result is that expenses and obligations are significantly understated in all of the government’s financial reports.

The Statement and Account Clause and Appropriations Clause are yoked together for a reason. Legislation that has been legally enacted and fully or partially funded with permanent appropriations must be reflected in the Statement and Account and other financial statements to the full extent of that funded obligation. Accounting principles governing federal financial reporting declare that legally enacted legislation that is fully or partially funded with permanent appropriations is not a legal obligation for accounting purposes that needs to be recorded in the Statement and Account or any of the nation’s financial statements.

The government’s accounting rules regarding permanent appropriations as well as off-balance sheet agencies and corporations cannot be reconciled with the Statement and Account clause’s “all public Money” requirement. It has no exceptions for entities or programs that our politicians want to put off-budget, off-balance sheet, describe only in footnotes or eliminate entirely from its financial statements. The three major items that are fraudulently reported include:
— The Federal Reserve System, Fannie Mae and Freddie Mac, with total assets of $4.5 trillion, $3.2 trillion and $2 trillion, respectively, are not consolidated into the government’s financial statements.

— The federal government’s $24.2 trillion net present value obligation for Medicaid was reported for the first time in the 2010 Financial Report and was buried in the back of this and subsequent reports. Omitting the disclosure of material information, as was done from the creation of Medicaid through 2009, violates the laws against fraud, and the Supreme Court’s “buried facts”; doctrine which appears in its securities law decisions suggests that even current reporting is unlawful. The amount reported in the 2015 Financial Report was $27.3 trillion.

— The total adjusted net present value obligation for Medicare and Social Security that is fully funded with appropriations reported in the 2015 Financial Report’s Statement of Social Insurance and related footnotes is $46.3 trillion. But the SOSI does not interrelate with the other financial statements and no current expenses are recorded for required future payments.

The government’s accounting rules mislead voters about the consequences of their votes and they make a mockery of the idea of political accountability. The federal government’s financial reporting leaves voters with no idea about the actual total amount of its expenditures. Furthermore voters cannot send the responsible politicians packing because they have retired from Congress. Their current representatives say that their hands are tied on mandatory spending and that they cannot be held accountable.

Why has this happened? The federal government has controlled financial reporting and thereby public opinion to minimize its accountability for spending. Politicians do not want to be held accountable for the full extent of their spending and, generally, wish to make re-election easier for incumbents. Hence, they collude to underreport appropriations and expenses. Proper reporting would lead to spending cutbacks, tax increases and/or recriminations for overspending, all of which are likely to cause voter dissatisfaction and changes at the polls.

Why does it matter? The upcoming presidential election continues a lifetime tradition for citizens of casting their votes without the benefit of having access to an accurate and complete published account of the government’s total receipts and expenditures. Congress’s failure to publish a complete and truthful statement and account of the nation’s finances has made our republic dysfunctional, plagued by successive budget-deficit and debt-ceiling crisis. This fraud has brought the government to the brink of financial Armageddon. Furthermore since none of the government’s financial reports complies with the Constitution’s requirements several private rights have been violated including the right to vote, freedom of speech, due process, equal protection, the right to financial information and political accountability. Finally, it has created a perpetual fraud on the judiciary.

The federal government has known for a very long time that its accounting standards setting process is unlawful. In 1921 Congress delegated responsibility for determining and defining the accounting principles and policies to be used by the federal government to the Comptroller General, the highest ranking officer of the General Accountability Office, an agency controlled by it. In Bowsher v. Synar the Supreme Court made it crystal clear that Congress cannot delegate lawmaking authority to a delegate of the Legislative branch.

James Madison once remarked: “A popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a tragedy; or, perhaps both.” We have reached the stage where federal financial reporting is both a farce and a tragedy. Primary responsibility for the fraudulent and unconstitutional financial reporting by the federal government lies with the leadership on both sides of the aisle in the House of Representatives and the Senate. A large number of Senators and Congressmen as well as senior Executive branch officials have violated their oath to uphold the Constitution and, arguably, they have committed “high crimes” providing a basis for their impeachment.

Joseph H. Marren is President and CEO of KStone Partners LLC.

Suggested citation: Joseph H. Marren Brazil’s President Impeached: Could It Happen Here?, JURIST- Professional Commentary, September 18, 2016,

This article was prepared for publication by Elizabeth Dennis, an Assistant Editor for JURIST Commentary. Please direct any questions or comments to her at

Opinions expressed in JURIST Commentary are the sole responsibility of the author and do not necessarily reflect the views of JURIST's editors, staff, donors or the University of Pittsburgh.