Posted on 08/03/2006 9:06:03 AM PDT by conservativecorner
The Comptroller General of the United States warns the nation will go broke within a generation - unless it takes radical steps now to rein in out-of-control federal spending.
In an exclusive interview with NewsMax, Comptroller David M. Walker, explained his mission: Save America from the brink of financial disaster.
Walker has revealed America's collision course in computer simulations that show balancing the budget in 2040 (under the status quo of spending like there's no tomorrow) could require cutting total federal spending by an incredible 60 percent - or raising federal taxes 200 percent over today's level.
Serving a 15-year appointed term that began when he took his oath of office on Nov. 9, 1998, this no-nonsense certified public accountant is the nation's chief accountability officer and head of the U.S. Government Accountability Office (GAO).
Walker has won plaudits from both Republicans and Democrats for his no-nonsense straight talk about the nation's current economic crisis.
In his wide-ranging interview with NewsMax, Walker offered a candid assessment of the problems and risks facing Americans over the next several decades.
Among his key assessments:
Prescription Drugs:: Walker says that the prescription drug plan is the "poster case for what is wrong with Washington." He notes that when Congress first took up the matter of Medicare prescription drugs, estimates placed the cost at $300 billion.
But he argues that both Congress and the administration simply downplayed or ignored the true costs of the program. Today, the nation will have to pay out for the program $8 trillion-plus in current dollar terms.
Walker also detailed that when the Medicare actuary of the Center for Medicare/Medicaid Services calculated the true costs of the program, he "was told he could not tell the Congress or else he might lose his job."
"That not only was unethical but it was illegal, and nobody has been held accountable for it," an angry Walker said.
Defense Budget: Walker argues that Defense Department simply is out of control and that basic rules of accountability don't apply. He said that although it received a whopping $500 billion in appropriations, the Defense Department "is the only agency in the federal government that cannot adequately account for its assets and its expenditures - and cannot withstand an outside financial statement audit."
Walker grades the agency with a "D" on "economy, efficiency, transparency, and accountability." He added, "And it has not been held accountable."
The Nation's Debt: Walker says the United States risks losing its pre-eminence around the globe because of its growing status as a debtor nation. He ominously notes that "last year was the first year since 1933 that Americans spent more money than they took home and, as you probably recall, 1933 was not a good year for the United States."
Because the United States has to rely on foreign central banks to finance its deficits, it places itself in a high-risk situation.
"It means that other players hold an increasing percentage of our nation's mortgage; and it means the debt service is going to go overseas rather than domestic; and it means that we will have less leverage on them with regard to economic, foreign policy and national security issues - and they will have more leverage on us."
Entitlements: The United States must rein in entitlement programs or face economic woes, he argues. Walker says that today the United States is "about 3 percent short of the GDP between what we are taking in and what we are spending, and it is going to get worse when the [baby] boomers start to retire - primarily because of entitlement programs.
"You can't solve the problem without fundamental reform of the entitlement programs. Medicare is going to require much more dramatic and fundamental reforms than Social Security because the problem is six to seven times greater than Social Security.
"It is going to take entitlement reform; it is going to take spend constraint; and it is going to take some revenue enhancements."
Walker's Mission
Walker's frequent refrain is simply, "The status quo is not an option!"
He's been telling his story to Congress, the media, and anyone else who will listen.
His globetrotting has included speaking appearances at Gresham College London, England; the London School of Economics; the Atlanta Rotary Club; the National Press Foundation; and the National Conference of State Legislatures - just to name a few.
Walker likes slide shows – to better facilitate the ominous graphs and charts that highlight his message.
The long-term modeling that is at the heart of his warning is adapted from work done at the Federal Reserve Bank of New York and the various new estimates that become available from the Congressional Budget Office and from the Social Security and Medicare Trustees.
Walker is not overly impressed with the recently touted spurt of economic growth and its accompanying windfall of unexpected federal revenues.
"Faster economic growth can help, but it cannot solve the problem," the straight-shooting former public trustee for Social Security and Medicare emphasizes.
Here's where Walker typically clicks on one of his attention-grabbing slides on the subject.
The audience digests as the GAO chief reads from the screen:
Closing the current long-term fiscal gap based on reasonable assumptions would require real average annual economic growth in the double-digit range every year for the next 75 years.
During the 1990s, the economy grew at an average 3.2 percent per year.
"We cannot simply grow our way out of this problem," he announces somberly.
When playing to a home crowd of working stiffs, Walker follows with another body blow that penetrates the reality world of mom and pop: It's called, benignly enough, "Our Total Fiscal Burden." But when broken down as to show the impact on every man, woman, and child in the country, it can knock the wind from the collective lungs.
Up pops another eye-widening slide:
Total fiscal exposures: $46.4 trillion.
Total household net worth: $51.1 trillion.
Burden/net worth ratio: 91 percent.
Forget the accounting jargon; what's my personal bill for my government's runaway spending?
As if to say "Glad you asked that," there follows the grim tally:
Per person: $156,000.
Per full-time worker: $375,000.
Per household: $411,000.
Gee, that sounds a bit extreme. Can our pocketbooks handle that tab?
Just how extreme is explained by the next slide:
Median U.S. household income: $44,389.
Disposable personal income per capita: $30,431.
After learning that we are a wee bit short on the greenbacks, Walker switches back to the macro-picture, revealing yet another disturbing picture:
"The United States may be the only superpower, but compared to most other OECD countries [countries belonging to the Organization for Economic Co-operation and Development] on selected key economic, social, and environmental indicators, on average, the U.S. ranks 16 out of 28," announces Walker to an accompanying slide.
Included in those OECD indicators are such down-to-earth items as quality of life, education, and prices.
Walker, the author of "Retirement Security: Understanding and Planning Your Financial Future," is for sure no administration spinner.
He will tell you that he is only following a grand tradition of the bipartisan GAO, which for more than a decade has published the results of its long-term budget simulations in reports and testimonies.
Well, at least some of the states are doing well these days - those increased property values and all . . .
Don't get too wound up on that front, warns Walker. States are reeling under their own fiscal challenges, including unsustainable Medicaid cost increases; unfunded liabilities of state retirement systems; education funding squeezed by competing demands; infrastructure maintenance and expansion needs given unparalleled sprawl and congestion; and - lest we forget - emergency preparedness response and recovery needs.
The bottom line, according to Walker: "We must make tough choices, and the sooner the better."
The chief financial overseer advises that a multipronged approach is needed:
Revise existing budget processes and financial reporting requirements.
Restructure existing entitlement programs.
Re-examine the base of discretionary and other spending.
Review and revise tax policy and enforcement programs - including tax expenditures.
"Everything must be on the table," says Walker.
While not an optimist, Walker does see some progress. He happily points out that the White House now "readily acknowledge now that we face a huge long-range structural deficit that has to be addressed."
Meanwhile, beating the drum for fiscal reform is but one facet of the immense GAO workload.
Walker's agency must advise not only Congress, but the heads of executive agencies -- such as Homeland Security, the Environmental Protection Agency, the Department of Defense, and Health and Human Services -- about making government more effective and responsive.
To do the job, Walker heads up some 3,200 employees and manages a budget of $474.5 million.
At the end of fiscal 2005, 85 percent of the 1,752 recommendations the GAO made in fiscal year 2001 had been implemented, notes the agency. But is the all-important keeper of the federal purse strings, the Congress, reacting to Walker's big-picture warnings of fiscal crisis ahead?
THAT is precisely what a meant!
There was a time in America(before 1965) when people paid their medical bills out of savings.
For some reason, that thread was pulled, or one of them was.
Good post, thank you. I think Mr. David Walker should visit this site: http://www.brillig.com/debt_clock/
We're already broke and if the government was a business it would have been forced to file Chapter 13 a long time ago.
Does anyone know if there are any other nations on the face of this earth that are so much in debt to other countries?
pinging for later
I noticed he didn't get into the issue of the fedgov's "unfunded liabilities" that surpass $50 Tillion and counting........guess he didn't want to depress us too much.
Interesting site. It's wrong, but interesting. Public debt is $4.8 trillion not $8.4 trillion.
Does anyone know if there are any other nations on the face of this earth that are so much in debt to other countries?
How much is our nation in debt to other countries?
They will raise deductables and eliminate services.
U.S. Treasury statistics indicate that, at the end of 2004, foreigners held 44% of federal debt held by the public. About 64% of that 44% was held by the central banks of other countries. A large portion was held by the central banks of Japan and China. This exposes the United States to potential financial or political risk that either bank will stop buying Treasury securities or start selling them heavily. In fact, the debt held by Japan reached a maximum in August of 2004 and has fallen nearly 3% since then. However, even if both banks cease to buy U.S. treasuries, the U.S. could find new buyers by raising the interest rates they pay.
Oh I see, you're obviously referring to what is officially 'on the books' not the true indebtedness.
The perennially plundered vaults that were supposed to hold our FICA deductions don't count in government debt calculations for some odd reason...
I wonder how the federales are gonna "pay" for the boomers retirement?
Is that the sound of printing presses being warmed up?
They do count, just not as "public" debt.
I wonder how the federales are gonna "pay" for the boomers retirement?
Logan's Run? Soylent Green?
Bump for later.
Absurd it may be but "Abnsurd" is one I'm not familiar with. There are a myriad of issues that bust the budget including but not limited to your list.
The money is being printed in S Kor, 1/3 the printing cost. And, future money will be electronic only, no printing cost. Free money, can't beat that!
Actually that is correct. Under the democrats it would be much worse. The liberals claim that Clinton created a surplus. Actually The Clinton administration reported a surplus of $559 billion in its final four budget years. The audited numbers showed a deficit of $484 billion.
http://www.usatoday.com/printedition/news/20060803/1a_coverart03.art_dom.htm
We have to shut down Social Security as an entitlement and change it over to a needs based system. We need to stop funding senseless projects on a federal system. If communities want things, they should fund it out of local taxes.
A precious metals backed money has kept nations from doing what we've foolishly done here. It is that history that caused OUR founding fathers to ATTEMPT to prevent prevent the current folly and insert a prohibition against fiat money into OUR Constitution.
With few exceptions, do you REALLY think the current crop of populist/socialist morons we elect today know more about NATURAL economic law than the men who put this thing together?
But SOME modern politicians MAY have understood the problem. See below.
Which is what?
And you didn't answer my question. A gold backed currency will save us?
Do you claim inflation and deflation didn't exist under the gold standard?
....and no one knows how much the 20 ton invisible stealth elephant wearing blue tennis shoes in the tea room costs.....................the black budget is?
What the government will probably do: Print more money and
loosen credit, on and on!
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