Topic: National Debt
David Walker: The End is Coming And No One is Listening
The most important issue is hardly talked about. It isn't the war, health care, or global warming. The increasing national debt is a financial cancer that will affect us and our grandchildren. Without money, none of these other things matters.
by Bob Nightingale
(libertarian)
Monday, September 15, 2008
David Walker should be on the news every night and isn't. In this election, we're more concerned about which U.S Senator will sit in the White House for the next four years. They're both promising increased "investments" in the future, with my money and yours. We're getting the company line on "energy independence", "universal healthcare", "the war on terror", and other government programs, which have nothing to do with the basic operation of the federal government, according to the Constitution.
In the final analysis, it doesn't matter. Neither candidate talks about the cause of all the economic turmoil we're experiencing now, and will for decades to come. It's the debt. Unless there is money available for these and past programs, none of candidates' campaign promises can be fulfilled.
From 1998 to 2008, David Walker was this nation's top accountant. As the Comptroller General, he headed the Government Accountability Office. It was his job to accurately report the financial state of the U.S Government. If anyone had access to the truth is was he. He was nominated and confirmed to a 15-year term unanimously during the Clinton administration and served throughout the subsequent Bush administration.
During his tenure, Mr. Walker figured out that unless major changes occur regarding spending and taxes, the national debt will outstrip any ability by the next generation to pay for it.
His office authored The Federal Governments's Financial Health: A Citizen's Guilde to the 2007 Fianancial Report of the United States Government ([link edited for length]). It contains the following dire timeline:
- In 2007, Medicare Part A benefit payments began to exceed the program's tax revenue.
- In 2011, the Medicare Part A Trust Fund begins to decline as benefits exceed payroll taxes and trust fund interest.
- In 2017, Social Security benefit payments will begin to exceed the program's tax revenue.
- In 2019, Medicare Part A Trust Fund assets will not be enough to pay full benefits. Under current law, benefits would be reduced to 79 percent of scheduled benefits in 2019, declining to 29 percent by 2081.
- In 2027, Social Security Trust Funds begin to decline as benefits exceed tax revenue and trust fund interest.
- In 2040, federal debt held by the public will exceed the historical high of 109 percent of GDP.
- In 2041, Social Security Trust Funds' assets will not be enough to pay full benefits. Under current law, benefits for all retirees would be reduced to 75 percent of scheduled benefits in 2041, declining to 70 percent by 2081.
- In 2080, total government cost will be more than three times revenue.
The tipping point in this scenario is Medicare. This year is when the Baby Boomers begin to retire. In three years they will become eligible for full coverage of Medicare. Over the next 20 years, Medicare expenses will swamp the government's ability to pay for them. Added on top of that is the draining of Social Security to pay for the rest of the government. Social Security was designed at a time when there were more than 10 workers for every retiree. Now it's closer to three workers per beneficiary, with ratio getting closer to one-for-one over time.
Mr. Walker explained in an interview with 60 Minutes ([link edited for length]) that no one is paying attention now, because the crisis is not immediate. Our obligations have been accumulating over decades. It may take another decade or two before we realized what happened. By then the economic tsunami will have hit.
In order to pay for future obligations, we would need at least $8 Trillion (12 zeroes) in the bank, drawing interesting. Just the opposite is true. The national debt this year will approach 10 Trillion dollars. A quarter of the federal budget will be used to finance this debt. If current trends continue, financing the debt will be the budget.
After touring the country, trying to get this message out, Mr. Walker resigned from government service. He is now the president of the Peter G. Peterson Foundation (http://www.pgpf.org), where he can devote himself to this message full time. I wish I could. I have to keep working to pay off my own debts!
©2008 Bob Nightingale, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Monday, September 15, 2008
Last modified: Monday, September 15, 2008
The views expressed in this article are those of Bob Nightingale only and do not represent the views of Nolan Chart, LLC or its affiliates. Bob Nightingale is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
Report violation by Bob Nightingale of Nolan Chart LLC's terms of use policy.
| More Articles By Bob Nightingale |
Reader Comments:
Posted By: erik
Date: 2008-09-15 10:57:06
You know it's the end when Lynne Cheney writes a children's book about the Constitution. I mean, how can you get more ironic and Orwellian then this?
Posted By: jason
Date: 2008-09-15 23:30:12
Imagine; a man riding a nuke into DC from 50000 feet, screaming "YEEHAW!!" and waving- not a hat, oh no nono... a T-bill. now THATS comedy.
Posted By: DigitalBob
Date: 2008-09-16 09:44:39
Jason,
I think that's Slim Pickens, and not T. Boone Pickens. I think your image would make a fine Youtube video. It would be a very dark comedy.
"The fault, dear Brutus, is not in our stars, but in ourselves, that we are underlings." And so too with the architects of our financial crisis. Those who were entrusted to be the stewards of our treasure have systematically made our children slaves through public debt.
I wrote this article Sunday night and submitted it Monday morning, before the market opened. Please pardon me as I puke on my IRA statement. --dB
Posted By: David S
Date: 2008-09-16 13:15:19
My guess is that the politicians won't do anything about this. Its easier to just keep spending and let the ceiling fall in on future generations. My congress-critter held a phone-in town hall meeting with her constituents some time ago. I mentioned the $45 trillion in unfunded liabilities and asked if congress had a plan for dealing with it. It was kind of like a deer-in-the-headlights moment for her. I haven't been asked to participate in any more of those meetings. I don't know why.
Posted By: Terryeo
Date: 2008-09-17 01:49:49
You're a government employee in charge of a small department and you want just one more computer, just one more employee. Twenty years later the department is 10 times bigger, but you still want a little more because that means a little more salary, a few more people under you, a little more job security. These are human motivations. And the idea of a little more influence, a little more popularity drives our congressmen.
Government tends to grow bigger because employees want their jobs to be a little more secure, want a little more income. And Congress can literally give themselves any wage they like. But the smart ones do it in ways less visible than figures on a paycheck. I'm saying, it is human nature and there is no check or balance for it except personal ethics. Woe!