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CHAPTER 22

Secretary of the Treasury Dennis Fleming looked like an aging bank

president. He kept his gray hair short and neatly combed, wore

gray suits, wingtip shoes, and muted ties. He took notes in pencil

on a large, white legal pad. He was bullish on America and its prospects

for economic recovery. The Presidents Wild West, blow the gunk out of

the system, trim all the fat to the bone, and let the pieces fall where theymay style was disconcerting to him, to say the least.

Where the President saw the economy as an Abrams tank that needed

to be whacked with a gigantic wrench to get it going in the right direc-

tion, Fleming saw it as a Swiss watch that needed delicate adjustments.

While the Presidents cowboy rhetoric and bold approach to problems

was popular with a public beset with economic worries and a national

identity crisis, every time Porter stepped up to a microphone, Flemings

heart seized in his chest. He was convinced that one of these times Porterwas going to fly wildly off script and send the markets tumbling.

But President Porter had no script. He had a vision for return-

ing America to greatness and either you were on board or you were

tossed overboard. He made no secret of the kind of people he wanted

around him.

That didnt mean, though, that the President sought only to surround

himself with yes-men. He welcomed healthy debate and differences of

opinion. But you had better be prepared to defend your position. And no

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matter what else, your policy ideas had to be informed by the same sense

of Americas continued potential that coursed through Porters veins.

In the history of the world, Porter was fond of saying, there hadnever been a greater force for peace, stability, liberty, and freedom than

the United States. Before America, the history of mankind had been one

of tyranny, with the masses lorded over and controlled by the few. The

United States had been established to protect the rights of the smallest

minority that had ever existedthe individual. You could not work for

President Paul Porter and not be fully dedicated to these ideals.

It was with those things in mind that Secretary Fleming had accepted

the quiet assignment given to him by the President several days ago. In allhonesty, he had thought the President was sending him on a wild-goose

chase. The suggestion that something like what he had suggested could

even exist was unthinkable before the threat by the Chinese. And while

Porter might not have possessed a Ph.D. in economics, he did hold an

MBA and he was an extremely intelligent man. Still, Fleming couldnt

understand how the President had come to suspect what they now knew

to be true.

Fleming had been cautioned to lay things out in a manner as easyto understand as possible. Though Porter encouraged his people to ask

questions when they didnt understand something, he knew that when

it came to economics, most people were in the dark and didnt want to

flaunt their ignorance. Assume they know a lot less than you, the Presi-

dent had directed him.

Keeping that directive in mind, Fleming accepted the remote from

the Situation Room tech, cleared his throat, and began his presentation.

After Snow Dragon came to light, the President asked me to look intosomething. He was curious about the fact that the Chinese believed they

would be able to land and establish permanent forces in the United States

after an attack.

What did this mean? The intelligence suggests that the Chinese are

training some sort of specialized force in North Korea, but to what end?

And why would they believe they would be able to put troops on Ameri-

can soil without any fear of international reprisal?

The Chinese do not possess any specialty that would be uniquely

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needed in the aftermath of a catastrophic event. None. This left us with

only two reasonable possibilities. One, that the attack is biological in na-

ture and that they possess some sort of immunity to the causative agent.This type of scenario is obviously outside our area of expertise at Trea-

sury, and is being considered by other, more appropriate national security

parties here in this room.

Which brings us to the second. Is it conceivable that China could

make a legitimate, legal claim to the United States after a catastrophic ter-

rorist attack?

Of course they cant, stated the Secretary of Defense.

Fleming raised his index finger in caution. Up until this week, Iwould have agreed with you. He advanced to his first slide. The na-

tional debt under prior administrations has been mounting at an alarm-

ing rate. Skyrocketing would actually be a better term. The bigger our

government gets, the more money it needs to operate. In order to get that

money, it has two choices. It can continue to raise taxes again and again

on our citizens and risk a revolution, or it can borrow in relative quiet,

out of sight of everyday Americans who dont pay attention. The federal

government has chosen to do a crippling combination of both.While high personal taxes leave Americans with less money to invest

and spend in the marketplace, high corporate taxes leave businesses with

less money to hire employees and force them to move things like man-

ufacturing and customer service call centers offshore in order for their

products to be competitive.

We saw the last administration increase the top marginal tax rate by

5 percent. The increase pulled billions of dollars out of American house-

holds and ended up being only enough to run the federal government forsix days.

We then saw this same administration, desperate to reverse its falling

poll numbers, continue to stoke the embers of class warfare. There is no

more anti-American, anti-democracy rhetoric than this. To turn neigh-

bor against neighbor because of the size of ones pocketbook is to plow

the ground and sow it with the seeds of socialism. In America, only op-

portunity is assured, not outcomes. Anyone who promises otherwise is

acting contrary to the values upon which our Republic was founded.

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The bottom line is that the federal government was never intended

to be the size that it has grown to. The Founders intended for it to remain

small and for the majority of issues to be handled at the state level wherecitizens can be more easily involved and have their voices heard.

But as the federal government has expanded, it has become its own

living, breathing organism. You have all heard the President liken it to

Jabba the Hutt from the Star Warsmovies, sitting on his throne gorging

himself all day and dispatching his henchmen whenever his existence is

threatened. This is exactly what the federal government has become. It is

like a giant octopus with razor-sharp tentacles, which lashes out when-

ever it feels threatened. We have seen the IRS, the NSA, the AttorneyGenerals office, and countless other federal departments and bureaucra-

cies weaponized and turned against the American people.

Anyone with the temerity to suggest that the government be scaled

back becomes an enemy of the state, targeted not only by its aforemen-

tioned tentacles but by a complicit, big-government media. It is worse

than Louis XIVs claimLtat, cest moi. It is no longer one person, but the

entire government declaring that the state takes precedence over the indi-

vidual. It has devolved intoLtat, cest ltat soi-mme.Imagine a family that is completely out of money but that keeps sign-

ing up for more credit cards. It doesnt scale back its lifestyle but actually

takes it to the next level, buying more expensive cars, summer homes,

and luxury vacations abroad. Its a recipe for complete and unmitigated

disaster. Yet damning the torpedoes, the government proceeds full speed

ahead.

And as it does, as the government continues to tax and grow and bor-

row and spend, the day of reckoning draws ever closer. The bill is al-ready overdue and at some point, we will no longer be able to borrow

the money we have been using to put off the inevitable. Simply put, our

national debt is growing faster than we can pay for it. The laws of physics

and economics are inescapable. No nation can keep spending money it

doesnt have forever. But spend we do.

The prior administration tripled the deficit and increased the na-

tional debt by over seventy-five percent. Within the next ten years, every

penny from taxes will go just to covering the interest on our debt. Well

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have to borrow money for everythingelse. Military spending, Homeland

Security, you name it. And knowing this, who would be stupid enough

to loan us any money? Fleming asked as he advanced to his next slide.This is where President Porters thoughts come in.

Forty percent of our national debt is held by the federal government

and the Federal Reserve. Essentially we print money and move it from

our left pocket to our right. The largest foreign holder of American debt,

though, is China.

Despite everything youve said, the Secretary of Defense inter-

rupted, that still doesnt mean that they can come in here and declare

themselves owners of the United States.Again, a week ago, I would have agreed with you, but hear me out,

Fleming replied as he went to the next slide. In the 1990s, Mexico had

a currency crisis, which the United States stepped in to help resolve. We

propped up the peso with an influx of $20 billion. It was the largest non-

military international loan the U.S. had made since the Marshall Plan.

There was a rumor that circulated at the time that the loan almost

didnt happen. Some were very concerned that the Mexicans wouldnt

be able to pay it back. Others were less concerned with whether the loanwould be paid back than with what would happen if the Mexican econ-

omy completely collapsed. Would our southern border be overrun with

economic refugees? Congress was dead set against the loan.

A small D.C. think tank aligned with the administration at that time

made a radical suggestion. Have Mexico collateralize the loan by putting

up the Baja Peninsula. If Mexico defaulted, Baja would belong to the

U.S. and become the fifty-first state. That idea was allegedly discussed

and dismissed as too crazy. The think tank then recommended Mexicosecure the loans with oil and natural gas drilling leases. That idea was also

dismissed. The administration was worried they could end up looking

like they had taken advantage of poor little Mexico.

In the end, the then Secretary of the Treasury skirted Congress by

tapping a Treasury Department emergency reserve fund and got the

money to Mexico that way. The idea, though, of nations backing up their

loans with something tangible had been planted.

Fleming clicked his remote and a new slide appeared. I know the

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President doesnt like to blame the previous administration. Weve all

been told we have to play the hand weve been dealt as well as we can for

the American people. But, it is important to note that the CongressionalBudget Office warned the last administration that the nations debt was

unsustainable and their spending policies were presenting lawmakers and

the public with difficult choices.

They were told that if nothing was done, entitlement spending

would double, the government would have less flexibility to respond to

unexpected challenges such as economic downturns or wars, and the risk

of another financial crisis was being greatly increased. All of these, they

were warned, would cause Americas lenders to demand super-high in-terest rates in order to continue financing our governments borrowing

binge.

The CBOs warning wasnt top secret. It was very public. Not only

were the markets listening, but so were the Chinese. They knew that it

didnt matter much who sat in the Oval Office. The United States gov-

ernment was a life-form committed wholly to itself. It would continue to

borrow, spend, and grow. It would die of obesity before ever agreeing to

be slimmed down to a manageable size.The previous administration used the Federal Reserve to keep inter-

est rates artificially low so it could continue to borrow money, but the

Chinese were not only wise to it, but also growing increasingly tired of

this game. Apparently, they got to the point where they were no longer

content to play along.

The Secretary of State looked at Fleming and asked, What do you

mean,apparently?

Your predecessor said it best. Our debt and deficits are unsustain-able and will cause us to not only lose our influence, but prevent us from

making the right decisions. He was right and that is exactly what has

happened.

China stopped listening to us about their human rights violations,

international partners no longer wanted to line up with us to take on

threats like Syria, Iran, or North Korea, and country after country, in-

cluding China, has been bucking to dump the dollar as the worlds re-

serve currency.

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In short, much of the world no longer respects us, China in particu-

lar. In order to continue to loan us money, they began to demand a new

premium, one more reflective of the risk they were taking.What kind of premium?

They wanted their loans backed up with more than just the full faith

and credit of the United States government. They wanted the loans to be

collateralized.

With what?

Fleming went rapidly through a series of slides. Everything. Oil and

gas leases in Alaska and the Gulf of Mexico. Mining rights throughout

the Rockies and the Mountain West. Timber. Farmland. Water rights.Shipping ports. National parks. For every loan we rolled over or issued

anew, the Chinese demanded a concession.

And the last administration gave in to this?

Fleming nodded.

Without congressional approval? the Secretary of State, a former

senator, asked incredulously.

The bigger the government, the less the respect for the rule of law.

The Secretary of Defense jumped in to chastise the Secretary of Stateand former senator. All that administration did was end-run Congress.

The warning signs were there and plenty of people were screaming for

you and your colleagues to do something. You and your pals, though,

didnt want to alienate voters. You all said, Well fix it later; that it had to

begin at the ballot box. Well, here we are. Thanks a lot.

Normally, the President would have short-circuited this kind of piss-

ing match, but all of it needed to be said. The Secretary of State was a

good peacemaker, but peacemaking had its place and its price. Turning ablind eye to abuses of office when he was a senator wasnt making peace.

It was capitulation.

How is it even possible that this is the first time I am hearing about

this? the Secretary of State demanded.

Fleming looked at the FBI Director, who had been assisting him over

the past week. Pulling a file from the folder in front of him, the FBI Di-

rector said, There had been a whistleblower at Treasury. She was appar-

ently ready to name names and went to a congresswoman she thought

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would be sympathetic. The congresswoman was sympathetic all right, to

the last administration. She ended up ratting her out in exchange for a

bunch of special items she wanted the President to approve through ex-ecutive order.

The Presidents people then went after the whistleblower with a

vengeance. Its not hyperbole to say they turned her life into a living hell.

She was not a perfect woman by any means and they used everything they

could against her. She has a handicapped son and they pulled the trump

card. They threatened her pension and medical benefits. She folded on

the spot.

The Secretary of State was irate. I want to know who the congress-woman was and I want to know who on the Presidents staff was involved.

This will not stand.

Now it was time for the President to get involved. Raising his hand he

said, Well get to all of that, but now is not the time.

The Secretary of State backed down and Secretary Fleming reclaimed

the floor. During the congresswomans reelection, the whistleblower

approached her challenger and gave his campaign the full story. It was

a very serious claim, which the campaign couldnt prove. Plus, she toldthem they couldnt use her name, so they didnt go public with it. They

did, though, pass it along to the FBI. But when agents approached her,

she denied she had made any of the claims.

Why? Is she some sort of loon? asked the Secretary of State.

No, it was still under the previous administration and she was afraid

they would come after her again. But with the new presidency, shes had

a change of heart.

The FBI Director and I met with her personally. In exchange for hercooperation, and eventual testimony, I offered to bring her back to the

Treasury Department, plus give her a promotion. She hasnt made up her

mind yet, but she has begun working with us.

What weve learned is that several key figures from the think tank

advising the administration during the Mexican peso crisis back in the

1990s were brought in under the most recent administration to advise

President Porters predecessor. We believe there was a second set of books

being kept in relation to China. Were attempting to locate them.

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The Secretary of State shook his head. The lawlessness youre sug-

gesting is unfathomable.

And none of it will matter if the Chinese succeed in pulling off theirattack. Which brings me to my summation. If everything we have learned

is true, if the Chinese were able to get the United States to collateralize

its debt obligations, and those obligations cannot be vacatedno matter

what happens to the United Statesthen we know why the Chinese feel

theyll be able to waltz right in here after a catastrophic attack and make

themselves at home.

With a ninety percent casualty rate, America as we know it wont even

exist anymore and China will be holding the deed to the United States.As we talked about at the beginning, who is going to argue with them?

Theyll probably even send us aid and offer humanitarian assistance. But

in the end, when America cannot repay its debts, because it has collapsed,

they are going to stake their claim and take what they believe is theirs. If

we do not stop them, this absolutely will be the end of the United States.