ELLSWORTH, Maine — Due to irresponsible fiscal policies and practices, the United States is on a path, that, if not fundamentally changed, will lead the nation to bankruptcy.
That was the message that David M. Walker, the former comptroller general of the U.S. and head of the Government Accountability Office, brought to Ellsworth last week. Walker, who headed the GAO from 1998 to 2008, was the Ellsworth Area Chamber of Commerce speaker last week in conjunction with the James Russell Wiggins Lecture Series, sponsored by the Ellsworth American weekly newspaper.
The problem stems from the extraordinary number of entitlement programs — existing and promised — that the federal government has approved and that it cannot pay for.
“The federal government has overpromised and underdelivered for many years,” he said. “And the situation is getting worse rather than better.”
The situation is worse than advertised, Walker said. The government faces serious structural deficits that will continue to grow worse as the generation of baby boomers reaches retirement age.
“Escalating health care costs threaten to bankrupt us,” he said. “Politicians will tell you what you want to hear and give you what you want even though they cannot pay for it. They will pass the buck to future generations who can’t vote and who are not born yet.”
Walker came armed with numbers, and those numbers were not good.
The U.S. government had $56.4 trillion in current liabilities and unfunded promises at the end of George W. Bush’s term as president. That amounts to the equivalent of $483,000 for each American household. By September, he said, that amount will have risen to an estimated $62 trillion, an increase of about 10 percent in just one year.
The national debt sits at about $11 trillion, almost half of which is held by foreign countries. That, Walker said, represents a threat to national security. According to recent surveys, he said, the thing Americans fear the most is the growing foreign debt and the potential for foreign influence on U.S. policy. Foreign nations — Japan and China specifically — already have exerted influence on policy decisions during last year’s financial crisis.
“That influence could increase significantly,” he told the Ellsworth audience, “unless our course is changed dramatically.”
As bad as the situation is now, he said, it could get worse. The potential cost of proposed health care reform will add to the existing unfunded entitlements. While meaningful health care reform is necessary, Walker said, the problem with the current health care system is costs. It doesn’t make sense to increase coverage, he said, until we bring costs under control.
“We need comprehensive health care reform that includes some level of universal coverage,” he said. “But we have to face the reality that costs are out of control and we can’t reduce costs by increasing coverage.”
Walker, who now serves as president and CEO of the Peter G. Peterson Foundation, said the situation will not change unless there is a fundamental structural change in U.S. fiscal policy that will put the country on a more realistic fiscal path.
Those changes will have to address federal debt and spending and reform of Social Security, taxation and health care, including a reduction in cost.
He called for a nonpartisan fiscal futures commission, appointed to review all areas of fiscal, tax and spending policy and to make specific recommendations to Congress which would have limited ability to amend the resulting bills.
Walker also urged Ellsworth residents to get involved and to advocate for the kinds of changes he described.
Much of the information he discussed, he said, is available on the PGP Foundation Web site at www.pgpf.org.