Ten Points About the U.S. Fiscal Condition
January 26, 2007
On Jan. 26, 2007, David M. Walker, Comptroller General of the United States, presented " America in 2017: Making Tough Choices Today Can Help Save our Future," which contained the following excerpts:
- The United States has "fiscal cancer," which demands a change in behavior to avoid catastrophic consequences in the next decade. The consequences will include slower economic growth, higher tax burdens, rising interest rates, mounting unemployment and a declining standard of living. There is no way the country can economically grow out of its problems.
- The nation's total liabilities and unfunded commitments—chiefly for Social Security and Medicare—have soared to $50 trillion from $20 trillion in the last six years. This means each American household owes $440,000, or about nine times the median annual income.
- The national's financial condition is worse than advertised. We have a $9 trillion accumulated deficit. The single largest item of waste in the federal government is interest on federal debt because it is paying for past sins. In the last year, interest alone rose to 9 percent of the budget from 7 percent, and it is poised to increase dramatically unless we change our path.
- A vast majority of federal government structure is based on conditions that existed in the 1940s to the 1970s—including weapons systems, tax preferences and entitlement programs—and is in dire need of re-prioritization and reorganization.
- With baby boomers set to retire in record numbers and the workforce shrinking, reforming entitlement programs must be our top priority. Social Security should be restructured in terms of retirement age and indexing benefit formulas, as well as to include a 2 percent mandatory payroll deduction that is put into a trust fund that can be invested to supplement retirement income.
- Our tax system is badly broken. Fundamental tax reform must streamline the code, which involves limiting tax preferences that cost the government $700 billion to $800 billion annually in lost revenues. The single largest tax preference is health-care insurance—$150 billion to $200 billion per year. Reform should include requiring income and payroll taxes on employer-supplied health benefits that are above basic coverage.
- Health care stands to bankrupt the United States, with Americans spending 50 percent more of its economy on care than any other country for below-average outcomes. The system must be changed to include providing government-funded, universal access to basic and essential care, as well as limiting the percentage of the federal budget dedicated to health care services and requiring more individual responsibility for health habits.
- People are starved for two things—truth and leadership. Politicians pander to the American public rather than tell the truth and take tough fiscal stands. Voters need to elect candidates who aren't concerned with being re-elected.
- College students should consider devoting two years to public service at some point in their lives in order to move from a short-sighted, self-centered "me" focus to one that considers the common good.
- The too-big-to-fail concept has been proved wrong historically time and again. We can, and I believe we will, rise to meet the challenges facing our nation, but we need to do it sooner rather than later.