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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.

The GOP solution is more tax cuts, more debt and more taxes on the next generation. Enjoy the tax cuts now (hint: in the real world there are no tax cuts, only deficits which are future taxes plus interest), because there will NEVER be another tax cut in the history of the United States. The republican party has already given away more money than we have.

Putting the Bush debt in perspective is always necessary. From 1789 - 1987 we created around $2.3 trillion of debt. In the past five years Bush has created $2.4 trillion of debt or more debt than all the presidents from Washington through most of the Reagan presidency (Reagan started this madness, creating more debt than all the presidents before him combined).