Tuesday, September 29, 2009


The former Comptroller General of the United State David Walker has crusaded to wake Americans up to the impending fiscal disaster caused by the out of control growth of entitlement spending. This is an issue that transcends the traditional conservative-liberal-paradigm, as seen by the support that David Walker has received from the liberal Brookings Institute and the conservative Heritage Foundation. The foundation of my belief in the dangers of a rapidly expanding state is based far less on conservative philosophical principles and far more on
indisputable black-and-white accounting issues.

Interestingly, David Walker believes that the reforms that lower the cost of health care are vital to salvaging our fiscal future, but "Those who think that creating thousands of billions of dollars in new government entitlements--in a health care bill that adds tens of millions of Americans to government programs--will do anything except hasten the coming bankruptcy bear the burden of showing why."


By John David Lewis
Associate Professor in the Philosophy, Politics and Economics Program, Duke University
August 28, 2009

A person who is in the pay of the government is not always free to speak publicly about the most pressing issues he confronts. Administrators who are appointed to perform specific tasks are generally not free to contradict or even to challenge policies. They often cannot advocate for specific proposals, even if they think that such proposals will be needed to prevent catastrophe.

When Dr. Alan Carlin, a federal Environmental Protection Agency official, wrote a report in March, 2009 that criticized the EPA's process of formulating regulations, the report was squashed. Emails from EPA officials state that "a very negative impact on our office" made use of the report impossible. To protect the bureaucracy, Dr. Carlin was told to cease such criticisms.

Such officials must often make a choice: to remain silent and keep their jobs, or to resign and speak the truth. Faced with this dilemma, on March 12, 2008, David Walker chose to resign.

David Walker is the former Controller General of the United States, and former head of the Government Accountability Office. As the nation's chief accountant he was appointed by President Clinton, and resigned near the end of George W. Bush's second term. He had no authority to decide how a single penny of government funds should be collected or distributed. His job was to count those funds.

Mr. Walker's enormous range of mind reaches far beyond a single budget year. His is a long-range perspective, which allows him to project fiscal trends decades into the future, and to assess, through simulations, the impacts of policy decisions beyond their immediate effects. He truly understands the economic maxim, promoted by Henry Hazlett, to look beyond the visible effects of any given policy, and to consider its unseen effects.

When Walker plotted these trends and considered demographics among many other factors, what he found was "chilling." If fundamental reforms are not begun now, he concluded, the United States will experience a financial and political collapse comparable to the fall of Rome.

In a presentation to the National Press Foundation, January 17, 2008, Mr. Walker brought forth the following facts and projections:

1. From 1966 to 2006, the percentage of federal funds spent on Medicare rose from 1% to 19%. This trend will grow exponentially as millions of "baby boomers" enter the entitlement pool.

2. For the same period, spending for mandated government commitments rose from 26% to 53% of the total budget. The budget is increasingly out of the control of government officials.

3. As of 2007, Medicare is running in arrears. In 2017 Social Security will be in deficit. By the year 2040, Medicare and Social Security alone will be running annual deficits of nearly 900 billion dollars.

4. Medicare spending from now until 2032 will be 235% of economic growth. By 2040, Medicare will be spending about 10% of the nation's Gross Domestic Product annually, and the annual deficits of the United States will total some 20% of the total Gross Domestic Product.

The bottom line is this: the largest mandated fiscal exposures now, projected into the future, are over 52,000 billion dollars. That will amount to 90% of all household wealth in the U.S. and will place a burden of over 450 thousand dollars on every household in the land. This is almost ten times the present median household income level. Such spending will lead to national bankruptcy.

Mr. Walker concludes that "We face large and growing structural deficits largely due to known demographic trends and rising health care costs." Further, "GAO's simulations show that balancing the budget in 2040 could require actions as large as cutting total federal spending by 60 percent, or raising federal taxes to two times today's level."

To close the revenue gap through growth, the United States economy would need to expand in the double-digit range for the next seventy-five years. During the boom years of the 1990s, the economy grew at an average rate of 3.2%. Walker concludes, succinctly: "we cannot simply grow our way out of this problem."

Of course Mr. Walker's analysis is far more complex than this. Health care is certainly not all of it--but health care entitlements constitute by far the largest single piece. Those who think that creating thousands of billions of dollars in new government entitlements--in a health care bill that adds tens of millions of Americans to government programs--will do anything except hasten the coming bankruptcy bear the burden of showing why.

Mr. Walker has taken his show on the road, in an attempt to educate Americans about the nature of the financial disaster they are creating. He was accompanied by both the Brookings Institute on the left, and the Heritage Foundation on the right. He stresses that this coming financial meltdown is known by everyone in Washington--but no one wants to acknowledge it.

A Rasmussen poll shows that almost twice as many Americans think that cutting the deficit, rather than health care reform, should be the president's top priority. Twice as many think that the legislation will drive up health care costs than think it will lower costs. Perhaps these Americans grasp Mr. Walker's point better than their elected representatives do.


Dr. Alan Carlin: http://www.openmarket.org/wp-content/uploads/2009/01/Carlin-Final-Report.pdf

EPA emails: http://cei.org/cei_files/fm/active/0/Endangerment%20Comments%206-23-09.pdf

David Walker's Presentation: http://www.gao.gov/cghome/d08446cg.pdf


No comments:

Post a Comment