Fiscal Responsibility

David Walker - Page 1

David M. Walker became the seventh Comptroller General of the United States and began his 15-year term on November 9, 1998. As Comptroller General, Mr. Walker is the nation's chief accountability officer and head of the U.S. Government Accountability Office (GAO). The GAO's mission is to help improve the performance and assure the accountability of the federal government for the benefit of the American people. One of the things Mr. Walker says is that he "speaks the truth to power," sometimes when they don't want to hear. He is a regular member of the panel on the Fiscal Wake-Up Tour. The following is a transcript of the talk he gave in Columbus, Ohio on January 7, 2007.

I think it's important that we talk about where we've been, where we are, and where we are headed because it's important that you have the foundation of the numbers because the numbers speak loudly and the facts don't lie. Forty years ago 43% of the federal budget was for defense. Last year it was down to 20% and that counts Iraq and Afghanistan. Forty years ago Medicare and Medicaid represented 1% of federal spending. Last year: 19%. The past cannot be prologue. The Federal Government keeps three sets of books. That's part of the problem. The politicians and the press typically only want to talk about the smallest deficit. We have made some progress in the short term. And making some progress in the short term is better than not making progress. But quite frankly, the short term is not the problem. In fact we have the wrong metrics. You'll see that in a minute.

Last year our unified budget deficit was $248 billion. Write 9 zeroes to the right of that. You don't appreciate it until you write the zeroes down. We spent every dime of the Social Security surplus on other government operating expenses and we have been doing that for years. So the real operating deficit was $434 billion. That's the real deficit. And on an accrual basis, where we keep our books for financial reporting purposes, as business does, $450 billion. But the problem is not the short term. In the last six years the nation's total liabilities in un-funded commitments just for Social Security and Medicare alone have increased from $20 trillion (add 12 zeroes to the right of that) to $50 trillion, in six years. Mainly due to Medicare, in part due to the passage of the Medicare Prescription Drug Bill, the most fiscally irresponsible act in decades. And now people want to fill the donut hole with jelly. We can't afford the donut. How do you translate $50 trillion into terms that you and I can relate to?

Fifty trillion dollars is 95% of the total net worth of every American. And it's going up faster than the net worth of every American. Last year it was 91%. Fifty trillion dollars is $440,000.00 per American household. The median household income in the United States is less than $47,000.00 a year. That means an implicit debt of nine times our annual income. That's like having a mortgage and no house. And you can see from these numbers the problem is not Social Security, it's Medicare. Social Security is easy. We can reform Social Security and exceed the expectation of every generation. I can write it down in less than five minutes and get broad based support for it. This is what we look like in January 2001. (View Charts - opens in new window) The bars represent spending as a percentage of the economy so inflation is taken out. The line represents revenues as a percentage of the economy so inflation is taken out. If the bar is below the line, that's a surplus. If the bar is above the line, that's a deficit. We had fiscal sustainability for forty-plus years in January 2001. We were on track to pay off all of the debt in the United States in January 2001. In fact people were worried about that.

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Article:
  Harry Zeeve: Page 1 - Page 2 - Page 3
  David Walker: Page 1 - Page 2
  Alison Acosta Fraser: Page 1 - Page 2 - Page 3
  Belle Sawhill: Page 1 - Page 2 - Page 3
  Chris Swann: Page 1 - Page 2 - Page 3
  Carl Tannenbaum: Page 1 - Page 2 - Page 3

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