How can we promote fiscal responsibility by government and not mortgage our children's and grandchildren's future?

David Walker

David Walker

- Founder, CEO, Comeback America Initiative
- Former U.S. Comptroller General
- Former head of the U.S. Government Accountability Office

David Walker, who has become an evangelist for fiscal responsibility and sustainability through his Comeback America Initiative, claimed the nation “lost its way in the early 1980s and became addicted to conspicuous consumption and debt.”

With the nation shouldering tens of trillions of dollars in debt, Walker said each American now owes more than $200,000, much of it in unfunded obligations to Medicare and Social Security funds. He sees a looming debt crisis in the next few years.

“We need to learn from the past and bring back some tough budget controls …  and comprehensive tax reform that will generate more revenues,” Walker said.

Claiming that Congress “needs adult supervision” to make tough decisions and return to founding principles of “thrift, savings, investment, limited debt and stewardship,” Walker called on students to become more informed and involved.

“Your future is being mortgaged at record rates,” Walker said. “Investment in your future is being cut as more of the (government) budget is going for consumption, primarily for seniors. We need a virtual movement … a social networking march on Washington to get them to make these tough choices.”

More from David Walker

What did the Simpson-Bowles Commission get right?

The Simpson-Bowles Commission got a number of things right. First, they demonstrated that our challenge is not really today’s deficits and debt; although they’re high and a matter of concern, it’s the ones that lie ahead. Those challenges are driven by demographics, healthcare costs and a growing gap between revenues and expenses. The gap is so great that everything has to be on the table: entitlement reforms, defense and other spending cuts and constraints, as well as comprehensive tax reform that will generate more revenues. I think they did a very good job. What’s sad is nothing has been done with their work by the President or to date by Congress, although that may change.

What specific actions should our nation take now to get our fiscal house in order?

The first thing that we should do is recognize that right now, Congress is debating the continuing resolution. The U.S. government spends $3.8 trillion a year out the front door and forgoes about $1.1 trillion a year in deductions, exemptions and exclusions to the tax code. They’re arguing over less than 1 percent of the budget. They’re arguing about the bar tab on the Titanic. So basically the first thing we have to do is reach agreement on spending levels for 2011 and 2012. Then we need to bring back tough statutory budget controls that will begin in 2013. Very importantly, we should set specific debt targets, as percentages of the economy. If they’re met, great. But if they’re not met, then there should be specific spending cuts - freezes on certain mandatory program indexing and subsidies as well as temporary tax surcharges that will come into effect. We can’t afford to do nothing.

What impact will healthcare reform have on the deficit?

There’s good news and bad news about healthcare reform. First, it's nice that 32 million people will be covered who weren’t covered before. Secondly, a number of the insurance reforms dealing with young people being able to stay on their parents' plans until age 26, preexisting conditions, lifetime limits, those are all positive things. However, there’s broad-based agreement that total healthcare cost as a percentage of the economy will be higher if the bill becomes fully in effect. Secondly, based on reasonable and sustainable assumptions, this bill will cost us trillions of dollars more than otherwise would have been the case. The chief actuary of Medicare estimates that it is $12 trillion more expensive than advertised. That’s real money.

How should the President and Congress approach tough issues such as spending on defense, Social Security and Medicare?

First, the biggest deficit we have in Washington is not a budget deficit, it’s a leadership deficit. We have too many people who are living for today rather than helping to create a better tomorrow. We have too many elected officials who are concerned with keeping their jobs rather than doing their jobs. So, the President needs to understand that he’s the chief executive officer of the United States in addition to being the commander-in-chief. That entity that he’s responsible for, its financial condition is poor and deteriorating over time. He has to lead. At the same time, leaders of both political parties in Congress have to recognize that they have greater duty to their country than they do their party. They need to work to promote progress rather than partisanship. So again there is a path forward. Let’s agree on spending for 2011 and 2012. Let’s re-impose tough budget controls. The first entitlement program that ought to be reformed is Social Security, because it’s the least problem and it’s the easiest to solve. The first tax reform we ought to do is for corporate taxation, because it can improve our competitive posture, enhance economic growth and generate jobs. But ultimately we’re going to have to reform entitlement programs, another round of healthcare, comprehensive tax reform, defense cuts and constraints. It’s going to take us a number of years to get there, but we need to get started now.

If you were a young person just beginning a career today, how would you prepare yourself for your own financial security?

Young people need to understand that three things are being done to them rather than for them. Their future is being mortgaged at record rates. Relevant investments in their future are being cut because that’s in discretionary spending and it's being squeezed at a time of increasing competition in an increasingly interconnected world. So they need to be more informed and involved in this issue as citizens, register to vote and make sure that we change course so that their future can be brighter that it otherwise would be. But as an individual from a financial stand point, they need to understand that the government has over-promised, it's going to have to restructure its promises and it's going to have to increase taxes over time. The younger you are, the better off you are financially, the more you’re going to be affected. Therefore, plan, save, invest and preserve for retirement. You’re probably going to have to work longer. Don’t count on the government to do as much as it’s doing right now. Make sure that you get a good education, because if you have a good education, you have a positive attitude, a strong work ethic, and positive moral and ethical values in this country you have unlimited potential.

Are you optimistic about the America your grandchildren will inherit?

I’m very concerned about the America that my grandchildren will inherit. I’m a baby boomer. And the baby boom generation is the first generation in the history of this great country that is not leaving the country better off than when we received it. We’ve failed in our stewardship responsibilities and I’m doing everything I can to make sure that we change course, not for me, and not as much for my children, but for my grandchildren. I believe that we can, I know we must and I hope that we will do so.

David M. Walker is founder and chief executive officer of the Comeback America Initiative, an organization that promotes fiscal responsibility and sustainability by encouraging key policymakers on a non-partisan basis to help achieve solutions to America's federal, state, and local fiscal imbalances. Prior to assuming his current position, Walker served as the first president and CEO of the Peter G. Peterson Foundation. From 1998 to 2008 he served as the seventh comptroller general of the United States and head of the U.S. Government Accountability Office. He has 15 years of total federal service and over 20 years of private sector experience. Walker has written three books, including his 2010 national best-seller, Comeback America: Turning the Country Around and Restoring Fiscal Responsibility. He is a frequent writer and commentator and is a subject of the critically acclaimed documentary I.O.U.S.A.

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