SATURDAY, DECEMBER 13, 2008
D.C. CURRENT
Congress Should Sample Detroit’s Medicine
By JIM MCTAGUE | MORE ARTICLES BY AUTHOR
Curing ailing Uncle Sam.
STAND ASIDE AL GORE! THERE’S A NEW DOCTOR DOOM in town, with a scary documentary and equally frightening stage patter. He says our country is just decades away from financial ruin that will make the current credit market meltdown seem mild.
The name of this frightmeister is David Walker. He was Comptroller General of the U.S. from 1998 to 2008, in charge of the Government Accountability Office. He is now executive director of New York’s Peter G. Peterson Foundation, an organization dedicated to the idea that America should live within its means.
Walker contends that the debt-riddled government, if left unchecked, will subject several generations of citizens to destitution. As of Sept. 20, 2007, the nation was in a $53 trillion hole, he says. That amounts to $455,000-per-household while median household income at that time was less than $50,000. The hole, caused largely by under-funded entitlement programs like Social Security, Medicare, and Medicaid, will grow by $2 trillion to $3 trillion each year, even if the next administration balances the budget.
IF YOU WORRY INCESSANTLY about the sorry state of today’s economy, just wait a few decades. Walker foresees a world in which the U.S.’ international prestige has withered, borrowing costs have soared, the value of the dollar has nosedived and taxes and unemployment have skyrocketed. What does all this mean for the average Joe? It means that his children and grandchildren will have a much lower standard of living than we do today.
Walker compares our nation’s fiscal morass to the one that helped topple the Roman Empire. In one speech he argued, “Rome fell for at least four reasons, and please listen carefully: A decline in moral values and political civility at home, an overconfident and overextended military, fiscal irresponsibility by the central government and inability to control one’s borders. Does that sound familiar?”
Walker has been singing this song for years but suddenly the cognoscenti are paying heed. One of his speeches was the lead story in The Trusted Professional, the newspaper of the New York State Society of Certified Public Accountants. A four-column headline on the usually staid paper’s front page screamed, “Former Comptroller General Walker Calls United States Government ‘Unsustainable.’”
His new celebrity is mostly the result of Hollywood magic. Walker and Robert Bixby of the Concord Coalition, which also promotes fiscal responsibility, are featured in a documentary called I.O.U.S.A. They were filmed touring the country and warning local communities about the impending calamity. The documentary got rave reviews at the Sundance Film Festival.
Walker says it’s not too late for our policy makers to head off disaster, though the cure will be painful. First, the Social Security Program must be altered. His solution: Reduce future benefits for workers below a stated age, say 55 to 60, who have above average earnings, while enhancing benefits for survivors and workers near the poverty level; gradually raise the retirement eligibility age and then index the age to the rise in life expectancy over time; increase the level of wages subject to the payroll tax while keeping payroll tax rates at their current level and add a supplemental — and payroll-deduction-based — savings account on top of a reformed defined benefit Social Security program.
Walker also says that Congress must immediately reform the tax system and broaden it to capture those who pay little or no income tax today. “There is little question that our current tax system is far too complex to promote voluntary compliance and facilitate efficiency, equity and enforcement,” he told me. “We also need to be increasingly concerned with the international competitiveness of our corporate tax structure. The federal government needs to engage in comprehensive tax reform that will broaden the tax base while keeping marginal tax rates as low as possible. This means fewer and more targeted tax preferences in a range of areas (e.g., health care, mortgage interest, savings). Ultimately, we are likely to move to a streamlined and simplified income tax structure with a supplemental consumption tax, possibly dedicated to health-care expenditures. We also need to move to more automatic savings arrangements to encourage personal savings.”
Finally, the federal government must get lean and mean.
I see dark humor in this. Congress wouldn’t consider a dime of taxpayers’ money for the Big Three auto makers until their executives produced a plan leading to sustained viability. What Walker is basically saying is that the government is not financially viable and so Congress is wasting taxpayer money. Why not give Congress a taste of its own medicine?
Since they played a large role in the credit market meltdown, members of Congress should not only forgo the 2.8% pay raise slated for January 2009 but cut their salaries of $169,300 back to $75,100, where they stood in 1985. Salaries would be restored when a plan is in effect that puts the country on the road to a sound fiscal future.
Congress, heal thyself!
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Brandi Jo Newman’s response:
I agree totally with the message in the text. BUT nothing will be done to avoid the impending collapse. We, us not them have to make the changes ourselves with our money and our own lives. We need to take care of own. Build legacies for our families, loved ones and closely tied groups.
Please read my powerpoint about this same message called ‘Out of Egypt’ http://www.slideshare.net/NewmanFinancial/out-of-egypt
Our government has not been our government since Lincoln - The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War - a great read for those who want the truth.
I don’t even want to talk about my reps - they are just as part of the problem as the overall government.
