CHAPTER 22

S
ecretary 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 they
may 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 Porter
was going to y 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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120 BRAD THOR
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 had
never 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 all
honesty, 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 easy
to 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
aunt 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 into
something. 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 nger in caution. Up until this week, I
would have agreed with you. He advanced to his rst 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 for
six 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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122 BRAD THOR
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 where
citizens 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 Wars movies, 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 Attorney
Generals ofce, 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 claim Ltat, 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 into Ltat, 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 decit and increased the na-
tional debt by over seventy-ve 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 everything else. 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 inux 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 loan
would 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 fty-rst state. That idea was allegedly discussed
and dismissed as too crazy. The think tank then recommended Mexico
secure 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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124 BRAD THOR
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 Congressional
Budget Ofce warned the last administration that the nations debt was
unsustainable and their spending policies were presenting lawmakers and
the public with difcult choices.
They were told that if nothing was done, entitlement spending
would double, the government would have less exibility to respond to
unexpected challenges such as economic downturns or wars, and the risk
of another nancial 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 nancing 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 Ofce. 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 articially 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 decits are unsustain-
able and will cause us to not only lose our inuence, 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 reective 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 State
and 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 x 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 a
blind eye to abuses of ofce when he was a senator wasnt making peace.
It was capitulation.
How is it even possible that this is the rst 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 le 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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126 BRAD THOR
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 benets. 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 oor. 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 told
them 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 her
cooperation, 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 gures 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 their
attack. 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.
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