The Bottom Line
Posted February 17th, 2008 by Da King
When I heard that the Comptroller General and head of the Government Accounting Office (GAO), David Walker, has resigned, I had to write about it. Walker was one of my favorite guys in government, probably due to the fact that he's not a politician. He was the chief accountant for the federal government. He's beholden to no political party. Walker was appointed by Bill Clinton in 1998, and continued serving through the Bush administration until now.
Because David Walker is not a politician, he doesn't engage in political spin. Instead, he has the refreshing habit of telling the plain, unvarnished truth. You can hear him tell some of the truth on Glenn Beck's show here. Please watch the video before you read the rest of this column.
The unspun truth about the state of the federal government's finances is pretty disturbing, and paints a pretty grim picture of america's future, which is why politicians like to cover it up. The politicians who cover it up the most are those politicians who intend to pursue the same irresponsible fiscal policies that led us this far off the rails. You can tell these politicians by their lingo. They tell you they want to raise taxes and increase government spending dramatically, although they use code words to disguise those facts. For instance, they'll talk about "investing" in this or that government program. They think you are too stupid to realize that means raising taxes and increasing government spending. If you elect these politicians, you prove them right. You ARE too stupid. When the government gives you "free stuff", it isn't free at all. YOU pay for it.
What David Walker knows is that unrestrained government spending and the expansion of entitlements is going to bankrupt this country. That is the bottom line, and that is what the pro-big government pols don't want you to know. This is an enormous issue, and we have two presidential candidates in the Democratic party who not only don't want to acknowledge it, they want to ADD MULTIPLE NEW ENORMOUS ENTITLEMENT PROGRAMS TO THE ALREADY STAGGERING COMING ENTITLEMENT TSUNAMI. Our financial house is on fire and they want to throw more wood on the blaze. This is irresponsibility on an unprecedented level (okay, maybe not unprecedented. Bush's liberal spending spree threw wood on that fire too). I'm not sure if the Republican presidential candidate understands the enormity of the fire either, but at least he's not chopping up more kindling to throw on.
As David Walker points out, every year we don't act drives us $2-3 trillion deeper in the hole, which already stands at $56 trillion. Do you see any politicians talking about it ? Facing it ? Or do you see politicians promising people the moon instead ? That type of feel-good politics does every one of us a disservice, but the disservice it does to us is nothing compared to what it will do to our children. These chuckleheaded pols actually call you selfish if you resist all this entitlement expansion, and they have over half the country brainwashed into thinking the same way. That takes some real chutzpah, because what is truly selfish is burdening future generations with the tab for OUR spendthrift ways. We want to ride the gravy train and let our sons and daughters pay for it. What could be more selfish than that ?
Reuter's reports that David Walker has resigned to head up the newly formed Peter G. Peterson Foundation. Walker said, "As Comptroller General of the United States and head of the GAO, there are real limitations on what I can do and say in connection with key public policy issues, especially issues that directly relate to GAO's client — the Congress. My new position will provide me with the ability and resources to more aggressively address a range of current and emerging challenges facing our country."
I look forward to hearing from him. Somebody in this country has to start dealing with reality, unless we are ready to forfeit the american dream and all start wearing Che t-shirts instead. I'm not even close to ready for that. How about you ?
February 17th, 2008 at 12:44 pm
First, I don't think this is true….
"They think you are too stupid to realize that means raising taxes and increasing government spending."
There's no hidden agenda in what Hillary and Barack are saying. Both will allow the irresponsible Bush tax cuts to expire. They also would end the costly war of choice in Iraq.
If health care is done correctly, prices will actually come down, not go up.
If you are referring to Social Security, it can be easily "fixed" by raising the cap on payroll taxes.
If what you say is true, it was also true in 2001. Republicans had no problem…..none…..with doubling the national debt while doling out tax cuts to the wealthiest.
Why in the hell would anyone think in 2008 that Republicans could fix ANY national economic problem?
That's the question that demands an answer.
February 17th, 2008 at 1:20 pm
King is correct.
Within the past month, David Walker gave a talk at the University of Akron on the fiscal problems of the U.S. There, he told how the cost of government is spinning out of control, and this will lead to national bankruptcy if things don’t change fast.
Walker said the cause of the problem is shifting demographics and the huge rise in entitlements — Social Security, Medicare, Medicaid, and prescription drug plan. These entitlements create an unfounded liability for the taxpayer to the tune of $440K per household — a liability which is growing each year.
And remember, to this staggering amount, you must add the unfunded liabilities of both state and local government, too. And how bad is this? Consider this. Even a two-bit city like Akron, which is going nowhere, carries a billion dollar debt. This addsanother $4,600/person (or about $10,000 per household) of unfunded liability for those in Akron.
When some lefty in the audience said he thought the financial mess was due to defense spending and the war in Iraq in particular, Walker answered that you could cut all defense spending AND earmarks and still the problem would be there. Why? Because, the cost of the entitlements dwarf all the other spending.
To see the slides that made up David Walker’s talk, go to http://www.gao.gov and click on the link for “Fiscal Wake Up Tour.”
But the Dim Party won’t wake up — at least not while they’re running for office. They are pandering to their constituency base, a base which is populated by too many that always has their hands out for freebees.
But once elected, the Dims will have to face reality — as will the Republicans who also are avoiding the issue for the most part.
Sadly folks, too much has already been promised to too many.
As David Walker said, the country cannot tax its way out of this problem (the Dim approach) or grow its way out (the GOP approach). The only feasible way out is to cut back on the entitlement promises. The sooner this process starts, the better as the pain will be less.
Without a doubt, some of this reduction in entitlements will be things like rasising the SS retirement age, rationing health care & many procedures, means testing, etc. etc.
What was the root of this financial problem we're in? It was pols — mostly Dim but also a fair number of Repblicans — promising people something for nothing just to get elected. Now many of these pols are dead or retired from office, and the mess they created will have to be cleaned up by others.
And note well: The longer the clowns in office put off tackling this problem, the more painful the cure will be.
February 17th, 2008 at 5:06 pm
OK, Vince you have just given me more reason to be scared all to hell but what do we do to ease back the problem, because it can't be done all at once. Let me throw in some for instances. Social Security should have at least a $5 trillion surplus stored up somewhere and since it should have been drawing interest that amount is much smaller than it should have been. When politicians decided to start spending the "surplus" each year as if it were really surplus the system went down the tubes. Now in order to repay the system they would have to raise taxes a ridiculous amount to pay that money back. The system could have been very solvent but politicians just can't stand to see any money lying around idly when they can find ways to buy votes with it.
More on SS and Medcare. Since we all get to pay on Social Security while expecting the service that has always been there we should demand that the Congress try to deal with what they have done wrong. SS and Medicare are largely the same thing but Medicare was never directly taxed for like SS. Today all those of us on SS get to have about $100 withheld each month for Medicare. That amounts to nearly as much as my sons pay for the excellent health coverage their employer has for them. Of course, Medicare pays so much more on many things than health insurance does but then who wants to employ old people like me (75) to anything more than menial tasks that they don't want to pay much more than the lowest rates they can get by with.
I am trying to say that we old folks are getting those entitlements that we have either paid for or at least paying on now. The people on Medicaid are mostly not taxpayers or people who pay anything in taxes. They are the real entitlement spenders.
Worst of all is the new programs that these two Dems are talking about and the amounts of money they are talking about. If you can't afford insurance under Hillary's plan the government will pay for it for you. I wonder how she wants to determine who can and who can't pay for it. Obama's doesn't force you to have insurance but he does want everyone to have it. It is too obvious to me that the Dems intend to get their foot in the door of socialized medicine and that is all.
If Rev Red can't see that King is right by talking about snow jobs of the voters aimed at getting votes and he won't believe you know the same thing I guess I am wasting my time talking about the same thing in agreement.
More than half of the people of this nation have been taken in by these promises this year and we may well never recover from this election if they attempt to come through on their entitlement promises.
Since politicians are to blame we need to apply the diaper rule to them soon. Politicians and diapers need to be changed often for the same reason.
February 17th, 2008 at 6:51 pm
Ghost says this….
"Without a doubt, some of this reduction in entitlements will be things like rasising the SS retirement age, rationing health care & many procedures, means testing, etc. etc."
…because he is uninformed. I know he's not being purposely deceitful. So it has to be that he is still uninformed on these topics.
There is no need whatsoever to raise the retirement age. The SS fund is in freaking SURPLUS until 2020 and that date can be easily advanced years forward with only two things happening….and one is pretty much a given.
1)The date 2018-2020, as the time when surpluses in SS cease, is based on 1% national economic growth. How ultra conservative is that?
2)The date 2018-2020 as the time when surpluses in SS cease, assumes no increase in the payroll cap. How stupid would it be to not increase the payroll cap which hasn't been lifted for over 20 years? Answer: neo-con stupid.
There will always be the extreme, and extremely foolish, far right capitalists who can't tolerate the federal government spending one dime to help any American in need. These folks do not represent the American way or the American dream or anything else that's American.
They represent a terribly misguided extremity found within the many groups of American capitalists.
These capitalists think the American way is to collect taxes and hand them to bloated defense contractors in preparation for wars of pre-emptive imperialism. That is the only justifiable use of taxes, in the mind of these extremists.
Thankfully these fringers, though in power for the last 7 years, won't be back in charge for a generation.
February 17th, 2008 at 10:49 pm
Beautiful Folks,
They have us right were they want us. We argue left-right,
lib-con and demonize each other. When will we all realize that our government as become a never ending big time wrestling performance sponsered by the mass media. They meet in the ring and do battle and we cheer for our favorites and argue amongst ourselves. Afterwards they gather in the dressing room laugh, split the proceeds and plan their next show. This would be laughable but as they play their games our country is sliding into collapse.
The only thing that can save us for ALL the people to sacrifice to end the oil addiction and pare down the entitlement programs. Will it happen? I fear not.
February 18th, 2008 at 10:01 am
Vince,
Great post. Thanks for the link to the Fiscal Wakeup Tour. That was tremendous. You covered this subject much better than I did. Thanks.
Rev,
Another sad partisan distortion fest from you. Stick your head in the sand and blame the right-wing for everything, as always, ostrich. That won't help this country one iota. You can't handle the truth, and the truth is, entitlements are going to swallow up the entire federal budget soon and unless we are willing to at least double the current tax burden (or maybe triple it if the Dems get into power and expand entitlements even further), which would be devastating to our country, then something else has to be done. That isn't me talking, btw, that's the COMPTROLLER GENERAL OF THE USA. I'm going to go out on a limb here, and say that he is a better accountant than you are and has a firmer grasp on the subject.
fred,
You nailed it. The coming fiscal tsunami can't be solved by blaming one side or the other. It can only be solved by dealing with the problem, which our pols are currently unwilling to do. Many, like the Reverend here, aren't even willing to admit the problem exists, because it interferes with their ideological plans. These pols just go on pandering to the people, promising the moon and delivering disaster.
February 18th, 2008 at 4:45 pm
King, here I am writing after reading your entry about the Trial Lawyers of America and their desire to keep the new FISA law from providing cover from the suits they stand to make millions and millions for. Let me say that I agree that it is the media and the lawyers who are screwing us around so much these days.
I can't think of one thing that would help this country, at least for a few years, more than an entire cleaning of the membership of the Congress and then inserting a rule about term limits.
I have to mention that poor soul, Rev Red, just can't see the point so often. Just today I heard Hillary talking to union workers in Wisconsin telling them that she would take away the subsidies to oil companies and finance her programs with that money. Couldn't touch one of her entitlement programs. She has earlier told people that she intends to take the excess profits from the oil companies. I wonder if she knows which of their profits are excess. She seems to want to finance her new entitlement programs with oil company subsidies, excess profits and the rescinding of tax cuts to the upper 2% of citizens. I'll bet that she reads the same kinds of info that Rev Red does if she has time from her pandering speechifying.
February 18th, 2008 at 7:14 pm
I just returned from an Obama rally at Youngstown State University. During his speech, he said he was going to throw the special interests out of Washington D.C.
Do you suppose he includes the trial lawyers and unions in with those special interests, or do you think it is only corporate america that he intends to kick away from the table ? The question kinda answers intself, don't you think ?
Here's the scariest thing Obama said at YSU. He was talking about how difficult it was going to be to make all his changes in government, and he said "it won't be easy to take all those profits away from Exxon-Mobil". I about crapped my pants. Who is Obama to take away company profits in a free society ? What is he advocating here ? Sounds like the end of capitalism to me. Of course, all the little college kids in the crowd applauded that totalitarian sentiment like good little indoctrinated footsoldiers. At another point, Obama said, "I like capitalism, but when the CEO makes a hundred times what the worker makes, that isn't right". Again, he was implying that he would take some sort of government control over the private sector to redistribute the wealth as he sees fit. It blows my mind that people listen to this crap in america.
But at least Obama wasn't wearing a Che t-shirt.
February 18th, 2008 at 8:08 pm
Was the Reverend there and did he faint?
February 22nd, 2008 at 9:48 am
Repealing the Bush tax cuts brings more than enough money to fix any Social Security funding problem — in fact, estimates are that the Bush tax cuts cost three times what it would to plug the Social Security funding gap:
http://www.cbpp.org/1-4-05socsec.htm
As for Medicare, that's a general problem with rising health care costs, not with the retirement of the baby boomers. Everything to do with health is skyrocketing in price. You could get rid of Medicare tomorrow and if health care cost increases don't slow they will still bankrupt the economy.
Health care inflation will start to moderate when we get a handle on the whole health care issue through some kind of reform. There's a reason why we spend almost double the per capita average of other industrialized countries.
February 22nd, 2008 at 2:37 pm
The SS problem is substantially smaller than the medicare problem, but reversing the Bush tax cuts, even if you counted every dollar strictly by the tax rates and ignored the economic effect of lower vs higher tax rates, still wouldn't fix the eternal scam nature of Social Security. It still wouldn't fix the core SS problem, which has resulted in about 18 SS tax raises along with benefit cuts since it's inception. It's a bogus program that needs overhauled.
I don't disagree with what you said about medicare, but the point was that the politicians are sitting on their hands as the problem gets worse. Nobody is addressing it, and they are even preparing big new entitlement programs to add to the pile. It's irresponsible.
February 22nd, 2008 at 4:34 pm
"Repealing the Bush tax cuts brings more than enough money to fix any Social Security funding problem "
Wrong. Repealing the Bush tax reductions would adversely effect the real economy, and tax revenues will fall. This would make a bad situation worse.
+++
"As for Medicare, that's a general problem with rising health care costs, not with the retirement of the baby boomers. Everything to do with health is skyrocketing in price."
This is an exaggeration in the extreme. Demographics — the massive retiring of baby boomers — will swamp the system. Not to recognize this as a driving force in the projected Medicare (and Medicaide) liabilities in the very near future flaws any argument on the subject.
+++
“Health care inflation will start to moderate when we get a handle on the whole health care issue through some kind of reform.”
“Some kind of reform? What's that! It's so ambiguous to be as useless as B. Hussein Obama’s chant of “Hope” and “Change.” What does “change” mean? What does “reform“ mean?
Sure, health care reform is necessary, and sure the overall system is inefficient, but what specific reforms you propose? Socialize the whole thing like the Dims want? How about rationing? That’s coming one way or another.
Let’s start reforms by paring the illegal immigrants off all the country’s welfare systems. And how about taming the trial lawyers (like John Edwards) who loot the medical care industry with their glib tongues and thereby add to its overall costs. Any arguments on these reforms?
And what about private health care accounts -the type that freak out the Dims?
But perhaps the biggest reform required is an attitudinal one, one to change people's preception of what personal responsibility is. Maybe people need to be schooled that in some way, somehow they themselves are accountable for staying healthy. Such a viewpoint is in direct contradiction to the prevailing general liberal philosophy that everything is society's fault.
And like King says, we need to stop any new entitlements that can only add to the cost of the government health care.
Oh, here’s another "reform." Mandate that medical schools increase their output of nurses & physicians; the U.S. needs to stop relying on imported health care people.
All this is a start, no?
Back to rationing as no reform is complete without discussing it. Rationing is indeed needed. In many cases, there is far too much treatment and testing going on — a lot of which is due to fear of being sued (the lawyers, again).
And then there's the matter of exotic, state-of-the-art treatments. But let’s see who is going to tell someone that the ultra-expensive, experimental treatment that might save his/her life is not covered? Again, some of this reality goes against the prevailing liberal philosophy of radical egalitarianism which says, because a wealth person may be able to afford a given treatment, you should get it, too — at government expense if necessary. It's a nice thought, but is it viable in the real world?
And as far as rationing goes, Americans will not accept the degree to which rationing is practiced in Canada or Europe. Nor should we. Where socialized medicine is practiced, relatively standard services (CAT-scans, PET-scans, and numerous other procedures) are rationed and have long waiting lines.
++++
And when King says, “The SS problem is substantially smaller than the Medicare problem,” he’s absolutely correct.
SS can be fixed by “minor” changes — gradually increasing the retirement age, maybe raising the ceiling on taxable earnings somewhat, means testing benefits, etc.
But Medicare and Medicaid will bankrupt the country if they aren't reformed/pared back. David Walker of the GAO says the country have five to ten years at most to address these problems.
February 23rd, 2008 at 12:57 pm
Ghost says…
"Repealing the Bush tax reductions would adversely effect the real economy, and tax revenues will fall. This would make a bad situation worse."
Revel in the brilliance of voodoo economic thought.
Tax revenues have already fallen. When tax cuts are put into effect, that's what happens. Tax revenues go down. That's really the purpose, or should be, of tax cuts. Letting people spend those cuts in hopes of a jumpstart to an economy that's faltering. A temporary "fix" as it were.
But the ignorance that accompanies voodoo economic thinking is that tax cuts mean MORE tax revenue. This has NEVER happened and it should NEVER be expected to happen. It's just silly.
Folks who are truly faith-based in their view of economics continually disagree with simple arithmetic. They believe that when you reduce the amount of revenue…somehow…..you get more. Wishful thinking, really.
I know, I know, it sounds kind of silly……but it's what supply siders…..believe.
Ghost goes on in his voodoo primer….
"Let’s start reforms by paring the illegal immigrants off all the country’s welfare systems. And how about taming the trial lawyers (like John Edwards) who loot the medical care industry with their glib tongues and thereby add to its overall costs. Any arguments on these reforms?"
Fact-less again. Undocumenteds, as many studies have demonstrated, actually put more into the American financial system than they take out.
Protecting Americans from medical institutions and doctors who would kill and maim us has very little to do with rising health costs. Instead, it has to do with accountability. Accountability for the powerful is something else the far right is not fond of.
More inflation is put into health care from CEO salaries, stockholder "profits", and promotional advertising than trial lawyers.
Ghost also says this…
"…because a wealth person may be able to afford a given treatment, you should get it, too — at government expense if necessary. It's a nice thought, but is it viable in the real world?"
I think the same question could be asked about, you know, Americans who didn't have enough food. It's a nice thought that none in America should starve….but is it viable?
I mean, goodness sake.
Finally, the Ghoster claims….
"And what about private health care accounts -the type that freak out the Dims?"
Think about this. Ghost asks about health care savings programs.
Tax shelters for wealthy Americans dressed up as some kind of "answer" to skyrocketing and unavailable health care.
If Americans can't currently afford health insurance or health care in general…..how could they afford to SAVE money they don't have either?
The answer to our national health care problem is not found in more tax breaks for the rich. You know, some "let them eat cake" kick in the teeth while their down approach.
The answer is found in what Obama says….health insurance and health care COSTS too much. He proposes methods of reducing those costs. That's what reality based leadership does. It looks for reality based, fact-based answers to problems.
February 24th, 2008 at 10:30 am
King,
If one reads the international press, one of the most inescapable conclusions that stands out is that the world is seriously adapting to supply-side economics — i.e., tax cuts.
That is because countries have learned that the key to successful international competition is low taxes as these lead to economic growth.
From Europe (Ireland, Sweden, Scotland, Spain, France, etc.) to former communist countries in Eastern Europe to even communist ones like Vietnam, all are cutting taxes as a way to attract capital, jobs, and growth.
This is because, beginning with the Regan tax cuts, the U.S. has created so much wealth & prosperity that the rest of the world is now trying to copy us.
There is little choice. The world is one big shopping market for capital, capital which can be transferred in and out of any country by the mere stroke of a computer entry.
Democrats like JFK knew that tax cuts stimulate the economy. But today’s Dims (leftists) are intent on killing the goose (free market & private initiative) that lays the golden eggs (wealth) by calling for economic killing tax hikes on things like capital, dividends, estates (the death tax), the “rich, and of course, U.S. corporations which already carry the highest tax rate in the world.
The sliver lining here is that even if a Dim wins the White House in November, there is little he/she can do to implement their radical tax hiking plans. Reality of the world won‘t allow it. It‘s that simple. The most damage a presidential Dim can likly do would be to get some face saving tax-hike pased as a way to mollfiy their loon base.
February 24th, 2008 at 11:39 am
It's odd isn't it?
To read the Ghostwriter's wealthy-favoring words….one would think the millions of working class families that make up, like, America, have really benefited economically form the last 28 years.
Nothing could be further from the truth. The average working American has seen ZERO wage growth during the entire time….but the wealthiest 1% has witnessed their wealth and income skyrocket during this same time.
It's not the "sliver" lining but instead the "silver" lining. And there is no silver linings or "sliver" linings for GOP'ers with an Obama win.
The gilded age is over. The wealthiest don't deserve anymore special treatment and the good news with an Obama presidency will be that they won't be getting anymore special treatment.
Welfare for the wealthiest must end.
And while it's being ended……voodoo, supply side craziness will be pushed back down the hole that it came out of.
The sheer nonsense found in Ghostwriter's words are betrayed by the last 7+ years of nothing but supply side, lassiz-faire, economics. Biggest tax cuts in history, no accountability for Wall Street thieves or crooked mortgage paper shufflers. Reductions of paper shuffling passive income for the most wealthy…..Bush's base, The Have's.
And yet with all this voodoo, the same kind Ghostwriter says we need more of, we have fewer good jobs, a devalued dollar, deficits through the roof, record foresclosures, a tanking stock market and the leading edge of a significant recession.
This is what Ghostwriter wants to see carried on and deepened.
For what reason? So that a no-nothing amateur economist can be seen as "right"?
Sounds like George W. Bush to me.
February 25th, 2008 at 6:40 am
There is no way to credibly argue the fact that high tax rates strangle an economy and low tax rates grow an economy. That can easily be seen in the recent economic stimulus package that Congress passed in bipartisan fashion. Their solution to ward off a possible recession was to put money back in the consumer's hands (a tax cut). Both sides of the aisle agreed with that move, because both sides of the aisle know that more money in the hands of the people (low taxes) stimulates economic growth. It's just obvious common sense. Consumers can't spend money that the government has taken away through taxation. Low taxes are not a temporary fix, as the Reverend falsely claimed, low taxes are necessary for a healthy and growing economy. The lower the better. In fact, the number one way that the government could get that giant whooshing sound to be the sound of a massive influx of jobs coming into this country instead of flowing out would be to drastically cut business tax rates. Some of the most dunderheaded Democratic ideas are in this area, where they want high taxes on business, to take away profit from business, and heavily regulate business. With such anti-business, anti-capitalist attitudes, how can it then not follow that business moves away in a global economy ? The whole country loses when those ideas are implemented.
Rev, as to your claim that supply side tax cuts NEVER result in higher tax revenue, the 1980's say otherwise, and tax collections since the Bush tax cuts went into effect in 2003 say otherwise also. Look at a federal revenue graph, for goodness sake. Economic growth leads to increased tax revenue. Not all tax cuts will lead to increased revenue, of course, but if they are properly targeted they can. Besides, the idea isn't to maximize government revenue in the first place (although liberals sure seem to think it is). The idea is the welfare of the people, and the more money the people have in their hands, the better off they will be. The more competitive our businesses can be, the more profitable they are, the better off we will be. The loony idea here isn't capitalism, the loony idea here is to treat business as if it is somehow the enemy, like the far lefters do. Since my hometown is Akron, Ohio, I'll say I'd rather have all those rubber shop jobs back than all the government "help" in the world. Every day and twice on sunday.
February 25th, 2008 at 8:12 am
"Rev, as to your claim that supply side tax cuts NEVER result in higher tax revenue, the 1980's say otherwise, and tax collections since the Bush tax cuts went into effect in 2003 say otherwise also. "
So did JFK's tax cuts on the early 1960's. They too increase revenue to the governmnet. JFK was a Democrat, not a Dim.
And to repeat, "even if a Dim wins the White House in November, there is little he/she can do to implement their radical tax hiking plans. Reality of the world won‘t allow it. It‘s that simple."