The comptroller: fiscal doom
The Christian Science Monitor
Linda Feldmann
January 5, 2006
WASHINGTON – David M. Walker takes the stage, a vision of the
prosperous accountant that he is - the crisp suit, the glasses, the receding
hairline, the pleasant demeanor. Then he opens his mouth.
"We face something that is unprecedented in the history of this country,"
Mr. Walker warns. "It is called a demographic tidal wave."
There it is, up on the PowerPoint slide, a graphic showing the start of a
statistical tsunami in 2011, when the first Baby Boomer reaches 65 and is
eligible for Medicare. But "unlike most tidal waves, which recede, this one
will never recede," Walker continues, his tone growing more ominous. "And we
... are not ... prepared."
Walker, the comptroller general of the United States, is scaring people. And
he's trying to. On this occasion, the nation's top auditor is addressing last
month's White House Conference on Aging, but it is a message he has delivered
countless times, to politicians in Washington, business leaders, ordinary
citizens - anyone who will listen.
Walker is not the only one trying to get Americans to understand the stakes
of what he calls the nation's deteriorating financial condition and long-range
fiscal imbalance.
Starting last September, a group of budget watchdogs, including Walker,
began what they call a "Fiscal Wake-up Tour," holding events in three cities,
with seven more dates scheduled and 20 other cities on a waiting list. Some are
held on college campuses; some bring in senior citizens, too. Ideally, say
organizers, these events promote intergenerational dialogue. Among this ad-hoc
coalition, whose members span the political spectrum, it is Walker who has the
most pungent way of expressing himself, his allies say.
"I describe him as the grim reaper; he hasn't denied the charge," says
Stuart Butler, a "tour" member with the Heritage Foundation, a think tank in
Washington. "When we take part in these things, he lays out the nasty numbers,
and the rest of us say what the options are. He's kind of a Sergeant Friday.
Just the facts."
In an interview, Walker suggests another label: "A CPA with a personality.
I'm no bean-counter."
In Walker's view, the impending demographic wave is only part of the
problem. The growth of entitlements and the healthcare system in general
threatens to bankrupt the nation, he says, referring to a potential "Argentina
scenario" - as in, default.
"Look at how much our liabilities as a nation - and our unfunded promises
for Social Security and Medicare - have grown," says the former partner at
Arthur Andersen LLP, pointing to a chart that shows the figure for "fiscal
exposures" more than doubling in just four years, from $20 trillion in 2000 to
$43 trillion by the end of 2004. Of that, $8.1 trillion alone represents the
new Medicare prescription drug plan.
"Yes, we need prescription drugs for seniors, but $8.1 trillion is more than
the entire debt of the US outstanding since the beginning of the republic in
1789!" he proclaims.
Warning early and often
Shades of Ross Perot during the 1992 presidential campaign? Perhaps. As the
head of the nonpartisan Government Accountability Office (GAO), Walker's goal
has been to speak truth to power, and now, increasingly, help build up
grass-roots pressure on Congress and the White House for fiscal reform.
In November 1998, when Walker was named to head the GAO, the investigative
arm of Congress, the federal budget was in the black - with surpluses projected
for years to come. But Walker wasn't sitting easy, and by 2001, he was issuing
warnings to Congress.
Soon enough, deficits came roaring back, as expenses following from 9/11,
Afghanistan, and Iraq came in quick succession, in addition to other new
spending. After hurricane Katrina hit, Congress immediately approved $62
billion in relief aid - sparking debate over budget offsets and the deficit as
a whole.
Before the holiday break, the Senate approved $40 billion in spending cuts -
a positive step, say deficit hawks, but still a drop in the bucket considering
the long-range fiscal imbalance.
Ultimately, Walker says, the nation will have to do three things:
restructure Social Security, Medicare, and Medicaid; limit the base of
discretionary and other spending; and "look at tax policies."
Even hinting at tax increases could be enough to get the appointee of a
Republican-controlled Congress booted from town. But Walker's stint at GAO
lasts until 2013, granting him some independence, and he plans to stick it out.
Politically, he is now unaffiliated, having started as a conservative Democrat
before becoming an active Republican. In 2002, Walker took the unusual step of
suing Vice President Cheney for information on his energy task force, but lost
in federal court.
Not everyone in Washington is solidly behind Walker's message. "He's very
good at portraying the conventional wisdom: that as long as we balance the
budget, everything's OK," says Dan Mitchell, a political economist at the
Heritage Foundation. "The real [question] should be, what do we do to fix the
size of government?"
From the liberal end comes concern that all Walker's apocalyptic talk will
put the social safety net at risk. Dean Baker, co-director of the Center for
Economic and Policy Research, calls Walker's warnings disingenuous. "The
problem isn't demographics, it's the explosion in healthcare costs," he
says.
Walker probably won't be the skeptics' biggest concern. Typically, the head
of the GAO doesn't command mass attention, and for now, Iraq and the economy
dominate public concerns. It may take a maverick in the 2008 presidential race
to drive the point home, Walker's allies say.
Taking the long view
In other aspects of his life, the Alabama-born Walker has followed his own
path. He married at age 19 (while a student at Jacksonville University in
Florida) and remains married to the same woman 34 years later. They have two
grown children, including a son who served in the US military in Iraq, and two
grandchildren, with another on the way.
His agitation on the nation's fiscal future, he says, "is not for me, it's
for my country, my children, and my grandchildren - particularly my
grandchildren."
Walker is also a history buff - his office is full of Teddy Roosevelt
memorabilia - and a member of the Sons of the American Revolution. His home in
Virginia sits on land once owned by George Washington, a president whose fiscal
discipline he admires. But in a recent column for BusinessWeek magazine, it was
the fall of the Roman Republic, spurred by "fiscal irresponsibility by the
central government," that led the piece.
Still, Walker calls himself an optimist. Past Congresses and White Houses
have put partisan differences aside and taken the hard steps, such as raising
taxes and reforming entitlements. The American tradition is that each
generation leaves the country better off than the one before it, and "that is
now at risk," says Walker.
"One of the things I have found over the years is that the American people
are a lot smarter than people realize, if they're told the facts. If you can
provide the facts and speak the truth to the American people, they'll get it.
They'll enable, if not demand, that action ultimately be taken on issues that
are in the broader public interest.
"I believe we can address this challenge," he concludes. "We just need to do
it sooner rather than later."
OTE: Social Security and Medicare projections based on the intermediate
assumptions of the 2005 Trustees' Reports. Medicaid projections based on CBO's
January 2005 short-term Medicaid estimates and CBO's December 2003 long-term
Medicaid projections under mid-range assumptions.
SOURCES: GAO ANALYSIS BASED ON DATA FROM THE OFFICE OF THE CHIEF ACTUARY,
SOCIAL SECURITY ADMINISTRATION, OFFICE OF THE ACTUARY, CENTERS FOR MEDICARE AND
MEDICAID SERVICES, AND THE CONGRESSIONAL BUDGET OFFICE; RICH CLABAUGH -
STAFF
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