The United States is courting fiscal disaster unless it makes tough choices, according to David Walker, who heads the U.S. Government Accountability Office. Walker, the U.S. Comptroller General, has been taking his message across the country with other financial analysts. Mike O'Sullivan spoke with them in Los Angeles.
For two years, David Walker has been visiting American cities with a group of financial colleagues from the left and right, including Isabel Sawhill of the liberal Brookings Institution, Alison Acosta Fraser of the conservative Heritage Foundation, and Robert Bixby of the Concord Coalition, a non-partisan organization.
In Los Angeles, one stop on their so-called Fiscal Wake-up Tour, they held a public meeting hosted by the group Town Hall Los Angeles. Before they spoke, they sat down with Voice of America.
Comptroller General Walker says growth will not eliminate the expanding U.S. debt. "For a while, there were people who said, do not worry about it, we will grow our way out of the problem. Other people said deficits do not matter. I think those people, by and large, are not being taken seriously any more," he said.
Walker says deficits have come down for three years in a row, but the good news is deceptive. He says the United States has annual tax revenues equaling 18 percent of its gross domestic product, but spends 20 percent of GDP on government programs. He says the country's liabilities and unfunded commitments have reached $50 trillion, or $440,000 per household.
"The real problem is not the past, is not the present. It is where we are headed, because we have got a tsunami of spending that could swamp the ship of state if we do not end up start making some tough choices. And the key is, the next president needs to make this a priority," he said.
Walker says the country needs to reform its Social Security retirement program and its Medicare and Medicaid public health systems for the elderly and poor. Together they make up 40 percent of the federal budget. He says the nation also needs to revise its tax system.
Robert Bixby of the Concord Coalition says the issue is moral as well as economic. "What we are doing with our fiscal policies is dumping a load of debt onto future generations, and that is generationally unfair. Our ancestors did not do that for us. They always left us a good strong country. It does not matter whether you are a Democrat or Republican, liberal or conservative. The numbers do not add up," he said.
The analysts disagree on specific solutions, but they agree that time is running out. Alison Acosta Fraser of the Heritage Foundation says the panel hopes to make the economy a key issue in the 2008 presidential election. "Previously it has been politically extremely difficult for any elected official to talk about solutions to these challenges. We are creating an environment where it is not only OK, but it is demanded of anyone who wants to come to office in Washington DC, for them to talk about these problems, acknowledge them, and then start talking about some real serious solutions," she said.
Isabel Sawhill of the Brookings Institution says few candidates have been willing to tackle economic issues. "You have most of the Republican candidates for the presidency saying, 'I will never raise your taxes'. In fact, many of them are talking about lowering taxes further. You have Democrats saying, 'I will never touch your Medicare or your Social Security'. That will not do the trick," she said.
She says the country needs both program cuts and added revenue, and candidates who will address the problem head-on.
Sawhill says there are national security implications of the growing U.S. indebtedness. The United States consumes more than it produces, and does so by borrowing, often from other governments or central banks.
China, for example, holds $420 billion in U.S. Treasury securities, and oil-producing nations also hold large sums of U.S. debt. She says that leaves the United States vulnerable to economic pressure in future international disputes.