(C)Crisis Point Publishing, May, 1998 Vol. 1 Issue 9
Continued from:
BLIND MAN'S BLUFF IN THE YEAR 2000
By Gary North
Kiss the IRS Goodbye
The IRS has 100 million lines of code. Their code is not year 2000-
compliant. After the failure of the 11-year project to upgrade the
system, Chief Information Officer Arthur Gross announced that getting
the IRS year 2000-compliant is the "highest priority for the IRS." The
IRS has nearly 50,000 code applications to coordinate and correct.
This task will require the IRS to move 300 full-time computer
programmers to the new project.
(Reported in "TechWeb," April 21,1997).
For comparison purposes, consider the fact that the Social Security
Administration began working on its year 2000 repair in 1991. Social
Security has 30 million lines of code. By June, 1996, the SSA's 400
programmers had fixed 6 million lines.
What if the IRS isn't technically equipped to pursue tax evaders after
December 31, 1999? What if the IRS computer system isn't fully
integrated with all of its branch offices? What if the system's
massive quantities of forms are not stored in a computer system that
is Year 2000-compliant? More to the point, what if 20% of America's
taxpayers believe that the IRS can't get them if they fail to file a
return?
In 1999, the IRS may find a drop in compliance from self-employed
people. If the IRS can't prosecute these people after 1999, there will
be a defection of compliance by the self-employed. When word spreads
to the general public, there will be a hue and cry -- maybe at first
against the evaders, but then against employers who are sending in
employees' money when self-employed people are escaping. Meanwhile,
cash-only, self-employed businesses will begin to lure business away
from tax-compliant businesses by offering big discounts.
This will start happening all over the world. Once it begins, it will
not easily be reversed. The tax system rests on this faith: (1) the
government will pay us what it owes us; (2) the government can get us
if we stop paying. Both aspects of this faith will be called into
question in the year 2000 if the governments' computers are not in
compliance.
Big Brother is no more powerful than his software. On January 1, 2000,
this strength may fall to zero. Actually, double zero.
If the IRS cannot collect taxes, and if all the other mainframe
computer-dependent tax collection agencies on earth do not fix this,
what will happen to the government debt markets worldwide? To interest
rates? To the government-guaranteed mortgage market?
Kiss them all goodbye.
"No Problem! Trust me!"
There are a few conservative financial newsletter writers who have
heard about y2k. They deny its economic relevance. A shut-down of all
mainframe computers would mean that newsletter writers will be out of
business after 1999 -- a thought too terrifying for them. So, they
brush y2k aside with some version of this rebuttal: "Of course, the
government may not get its computers fixed." This is supposed to calm
you. It should terrify you. Ask yourself:
What happens to T-bills and T-bonds if the IRS computer breaks down
and a tax revolt spreads because taxpayers know the IRS will never
find them, and that if they pay their taxes, they won't get their
refunds?
What happens to money market funds and bond funds that invest heavily
in government debt when investors realize that if the IRS can't
collect taxes, the government will default on its debt?
What happens to the banks when depositors figure out that the FDIC is
bankrupt and that nobody insures their accounts any more?
What happens to your job when the banks close because of bank runs,
and no business can borrow money or even write a check to its
employees?
What happens to the delivery of food into cities when money fails
because the banks are busted?
What happens to the delivery of public utilities when money fails
because the banks are busted?
What happens to your retirement fund when ERISA, the government
pension guarantee program, goes bankrupt?
What happens to the 38 million people in the U.S. who are dependent on
Medicare?
What happens to 42 million people on Social Security?
What happens to every state government?
What happens to crime rates when the state cannot imprison violent
criminals and may have to release those who are locked up because they
can't be fed?
What happens to the world economy when this scenario is multiplied
across every government?
Kiss you job goodbye.
Especially if you're a journalist. I know. I am one. I figure I'll be
out of work -- forced retirement -- January 1, 2000. I'm making plans
to be in small-scale agriculture. I'm out of debt.
What about you?
Psychological Deferral
Those in authority prefer to defer thinking about this. They are
playing Scarlett O'Hara: "I'll think about it tomorrow," followed by,
"Well, fiddle dee-dee." Deferral is a normal response to distant
problems. The question is: What can we afford to defer? People defer
making this assessment. The fact that you have not read much about
this looming problem doesn't mean that it isn't a problem. If your
employer has not actively sought solutions to this problem, your firm
had better not use mainframe computers or be dependent on suppliers
that rely on mainframe computers.
Everyone assumes that someone else is doing something to solve these
problems. "It's being taken care of." The problem here is the passive
voice. Who, exactly, is taking care of it? What, exactly, is this
person doing? Is he on schedule? How do you know for sure? Are you
taking his word for it? Anyone who takes the word of a computer
programmer that he is on schedule is a person of very great faith. If
the programmer says "Sorry, I didn't make it" on December 31, 1999,
you're dead in the water. Meanwhile, he moves on.
What You Should Do, Beginning Today
First, you investigate whether what I'm saying is true.
Second, think through what happens to you if the local power company
and the local water and sewage company shut down in your city for six
months. "Who ya gonna call?" Especially if your phone is dead? And if
you do get through, how ya gonna pay if your local bank is defunct?
Third, here is my personal strategy. I have adopted a question: "Can I
prove on paper that he owes it to me?"
I want hard copy print-outs of everything I do with the government. If
you are owed money from Social Security, and you're dependent on this
income, contact the Social Security Administration every year and get
a letter telling you what you're owed. This is true of every
government pension system.
Do you have a copy of your birth certificate? If not, write to your
place of birth and get it. Even if that community has not computerized
the records, do it now. Even if it keeps the records in a desktop, do
it. If word starts to spread, they may be buried in requests in 1999.
You want your paperwork completed before word gets out.
Do you have a copy of your college transcripts? If not, get it.The
same goes for your work record history. Assume that your records are
in some company's mainframe computer. Assume also that the company has
failed to update the software.
Do you have a print-out of all of your insurance records? Would they
stand up in court? If not, get what you need, now.
Have you spoken with your local insurance agent? Is he fully aware of
the problem? Ask him straight out if he has scheduled an update of his
software if he relies on vendor-supplied software. He deserves to know
what is coming. So do you. (If you want to photocopy this issue to
send him, go ahead.)
Think through this problem in advance, before it gets out and creates
a banking panic, all over the world. This story will get out
eventually. In 1999, when reporters are running around looking for
sensational Year 2000-third millennium stories, this one will at last
surface. It already has: in Newsweek. At that point, every government
bureaucrat whose agency is at risk will start playing the "No problem"
game. "It's being taken care of." The bureaucrat's number-one rule is
to evade responsibility. No one with any authority is going to admit
that his malfeasance in office is going to create a disaster on Jan.1,
2000. The basic response will be this: "There's no problem here, and
furthermore, I'm not responsible when everything collapses next year!"
E-mail this report to anyone you care about.
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LETTERS TO THE EDITOR
Bob,
I am already on your email list. I was simply asking if you had an archive of all your emails up on the web or not. I would be willing to archive these for you and provide an easy to use search engine for finding data in them -- that is if you would like it (After all, it would be free). Let me know if you are interested.
Bill Nelson
If you like BibleNet, please tell a friend!
http://www.biblenet.net
Dear Crisis Point,
I would first like to thank you for your wonderful radio programs that are aired every week. They are very informative and I enjoy all three of the pastors very much. I just wish that your show were on 5 days a week instead of just 2. I am a recent subscriber to your newsletter and I am enjoying it very much also. Thank you.
Sincerely,
Mike Sidlo
Dear Bob,
I would like to ask if you could include a link on the bottom of your
newsletter for the page that I did for the tornado relief in Alabama.
The tornado that hit here, just a few miles from my home, on 4-8-98
killed 33 people, destroyed 22 miles of land, houses, churches, a fire
department, and one school. 1,023 homes were totally destroyed. The
people need help rebuilding. Some of them have insurance, some of them
do not. Our church, Fellowship West, is helping those who do not have
insurance or other sources to help them rebuild, buy clothes, food, etc... Many of these people lost everything.
You could help by putting a link on your page to:
Alabama Tornado Relief:
http://www.useekufind.com/alabama
Thank you so much and keep up the good work.
Kathlene Rushing
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LETTER FROM THE EDITOR'S DESK
Please - before you decide on a company to host your web site-READ
THIS! The following information explains key factors in selecting a
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Locating the proper web host for your business is NOT a chore to be
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The following information contains everything you need to know to make
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Basically, web hosting services fall into one of 3 categories:
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At first glance, there is no simple choice especially for the "new to
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Choice one above is excellent for personal, family, hobby or club, and
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Choice two above looks, at least on the surface, to be a good choice.
After all, most of the low-cost web hosting companies "promise" free
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What you are left with is a level of support and assistance far below
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Which brings us to choice three - Professional, high quality web
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Simply put, Virtualis offers the best web hosting on the Internet.
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WESTMINSTER SHORTER CATECHISM Q & A
Q. 9. What is the work of creation?
A. The work of creation is, God's making all things of nothing, by the
word of His power, in the space of six days and all very good. (Gen.1:
1), (Ps.33: 6,9), (Heb.11: 3), (Gen.1: 31)
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(Matt.28:19,20)
"Crisis Point" the Newsletter
1998 Crisis Point Publishing (CPP)
BobJackson editor@crisispoint.com
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