To Get U.S. Priorities Right, David Walker Should Be Next VP
What kind of America are we going to leave to our kids? The question is the biggest cliché in American politics and the least seriously addressed major issue.
[IMGCAP(1)]Because, in fact, the now-retiring baby boom generation is passing on to its children an America buried in debt, woefully short on savings and investment and facing stupendous tasks we dont have any idea how to finance.
The United States already ranks far behind its major economic competitors in health care outcomes, educational performance, environmental quality and national savings threatening the countrys world leadership and standard of living.
The person who sounds the alarm about all this better than anyone else and deserves to be vice president on either partys ticket is David Walker, recently resigned as the head of the Government Accountability Office and now CEO of the Peter Peterson Foundation.
A former Reagan administration official, Walker ran and transformed the GAO on an independent, bipartisan basis. He couldnt deliver any state or constituency, but hed mark either partys presidential nominee as a determined, visionary reformer.
From a fusty agency specializing in microanalysis and known as the General Accounting Office, Walker gave GAO a new name and turned it into a broad-gauge investigator of waste and a tireless activist in the cause of economic sanity.
Along with representatives from the Heritage Foundation, the Brookings Institution and the Concord Coalition, Walker traveled the country on a fiscal wake-up tour to make people aware of the unsustainability of Americas long-term finances.
The killer statistic that tour participants emphasized was that, by 2040, three federal programs Social Security, Medicare and Medicaid, plus interest on the national debt are scheduled to consume 20 percent of gross domestic product, or what the federal government now spends for all its functions.
Thats practically a dictionary definition of unsustainable. It means that the next generation of workers will have to have its taxes more than doubled.
In reams of reports and pungent speeches, Walker has struck a loud series of gongs about all levels of debt and unfunded obligations, the challenges of an aging population, and the consequences of inaction. He also outlined proposed solutions all politically difficult.
Walkers principal mantra is no more entitlement programs that are not paid for. Last week he denounced Congressional plans to spend $52 billion over 10 years on a new GI bill, guaranteeing college benefits to veterans.
No matter how laudable the purpose or well-intentioned the program, he said, if its that important, we ought to pay for it.
He also declared the Medicare prescription drug bill passed in 2003 the most fiscally irresponsible legislation in decades.
The easiest-to-understand level of national debt is debt held by the public the accumulation of federal fiscal deficits. This number has climbed during the Bush administration from $3.4 trillion to $5 trillion or 36.8 percent of the gross domestic product.
According to the GAO, that will rise to 62.7 percent of the GDP by 2020 and 250 percent by 2040. The highest that figure has ever reached was 109 percent in 1946.
As Walker pointed out to me in an interview, post-World War II U.S. debt was all owed to Americans. Now, half of it and 75 percent of new debt is owed to foreigners.
But there are other measures of excessive debt accumulated by the United States. As of March 2008, the federal governments total outstanding debt, including sums owed by Social Security and other trust funds, was $9.4 trillion, up from $5.6 trillion when Bush took office.
Then there is the total of long-term obligations incurred by current federal law mainly retirement benefits and Medicaid for the poor which comes to an astounding $53 trillion over the next 75 years, representing 90 percent of the total net worth of American households, or $175,000 per person or $410,000 per full-time worker.
And, piled on top of all that comes Americas huge trade imbalance and the personal debt and lack of savings of ordinary citizens that used to be offset by rising home values, but no longer is.
Weve not only burdened our children with debt, Walker told me, but were not investing in them. Were not investing in them, but we expect them to pay the bills.
A just-issued report by the childrens advocacy group, First Focus, shows that federal outlays for childrens programs has increased by only $2.8 billion in the past four years, while spending for seniors increased by $140 billion.
As Walker put it in a recent speech, current fiscal policy is creating an unfair and unethical relationship between todays citizens and tomorrows taxpayers. Baby boomers and current retirees benefit from todays higher spending and lower tax policies, while our children and grandchildren will be expected to pay the bill for todays excessive consumption.
Walker advocates a series of reforms, starting with shaving future entitlement benefits, controlling health care costs,and changing the tax code to reward savings and investment.
Hed be a challenge for either partys ticket or administration. And yet, Walker has the best strategy of anyone to answer the question: What kind of America will we leave to our kids? Its really the most important question of the 2008 election. If the next president wont nominate Walker as I expect then he or she emphatically should listen to him.