Posted by Jim Lindgren:
Former GAO Head Warns of Impending Deficits.--
http://volokh.com/archives/archive_2009_08_30-2009_09_05.shtml#1252180478
John Fund interviews [1]former GAO director David Walker:
David Walker sounds like a modern-day Paul Revere as he warns about
the country's perilous future. "We suffer from a fiscal cancer," he
tells a meeting of the National Taxpayers Union, the nation's
oldest anti-tax lobby. "Our off balance sheet obligations
associated with Social Security and Medicare put us in a $56
trillion financial hole�and that's before the recession was
officially declared last year. America now owes more than Americans
are worth�and the gap is growing!" . . .
Mr. Walker's own speeches are vivid and clear. "We have four
deficits: a budget deficit, a savings deficit, a
value-of-the-dollar deficit and a leadership deficit," he tells one
group. "We are treating the symptoms of those deficits, but not the
disease."
Mr. Walker identifies the disease as having a basic cause:
"Washington is totally out of touch and out of control," he sighs.
"There is political courage there, but there is far more political
careerism and people dodging real solutions." He identifies
entrenched incumbency as a real obstacle to change. "Members of
Congress ensure they have gerrymandered seats where they pick the
voters rather than the voters picking them and then they pass out
money to special interests who then make sure they have so much
money that no one can easily challenge them," he laments. He
believes gerrymandering should be curbed and term limits imposed if
for no other reason than to inject some new blood into the system.
. . .
What kind of reforms would Mr. Walker hope the commission would
endorse? He suggests giving presidents the power to make line-item
cuts in budgets that would then require a majority vote in Congress
to override. He would also want private-sector accounting standards
extended to pensions, health programs and environmental costs.
"Social Security reform is a layup, much easier than Medicare," he
told me. He believes gradual increases in the retirement age, a
modest change in cost-of-living payments and raising the cap on
income subject to payroll taxes would solve its long-term problems.
Medicare is a much bigger challenge, exacerbated by the addition of
a drug entitlement component in 2003, pushed through a Republican
Congress by the Bush administration. "The true costs of that were
hidden from both Congress and the people," Mr. Walker says sternly.
"The real liability is some $8 trillion."
That brings us to the issue of taxes. Wouldn't any "grand bargain"
involve significant tax increases that would only hurt the ability
of the economy to grow? "Taxes are going up, for reasons of math,
demographics and the fact that elements of the population that want
more government are more politically active," he insists. "The key
will be to have tax reform that simplifies the system and keeps
marginal rates as low as possible. The longer people resist
addressing both sides of the fiscal equation the deeper the hole
will get."
References
1.
http://online.wsj.com/article/SB10001424052970203585004574392620693542630.html
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