David Walker U.S. Comptroller General Sounds Urgent Warnings About U.S. Fiscal Policy by John Shaw David Walker, the U.S. comptroller general since 1998, is standing in to fill a role that has been ominously vacant in the United States for some time. He is a government official who is willing to tell the truth about the severity of Americaís budget problems and also outline painful solutions to fix them. Arguably, Federal Reserve Board Chairman Alan Greenspan once held the job of fiscal truth teller in the United States. But Greenspan is no longer the completely revered figure he once was, especially to many Democrats who believe he has supported President George W. Bushís tax cuts and Social Security proposals for partisan reasons. And Greenspanís fiscal sagacity is also in growing dispute. The Fed chairman famously declared in 2001 that he was concerned the United States would pay off its public debt so quickly that it would destabilize financial markets. This is a problem that Greenspan no longer has to worry about. But Walker, who heads up the Government Accountability Office (GAO), is determined to discuss the fis cal challenges facing the United States in the hope that Congress and the White House will get to work. ìThe current path of American fiscal policy is unsustainable,î Walker said in an interview with The Washington Diplomat. ìFor the United States, continuing with the status quo is not an option. We face large and growing structural deficits that are driven by known demographic trends and rising health care costs. Itís going to take many years to get us back on a prudent and sustainable long-term fiscal track. But the time to start is now.î Walker said the countryís budget outlook is not only grim, it is poised to get much worse and can only be reversed by tough policy adjustments that are implemented over a generation. He argues that deferring policies that reduce spending and increase taxes will only make the ultimate solution more painful and the nationís long-term future more turbulent. ìRemember the passengers of the Titanic had a smooth ride and a great timeóuntil the very moment the ship hit the iceberg,î he cautioned. Walker became the seventh U.S. comptroller general on Nov. 9, 1998, and is about halfway through his 15-year term. As comptroller general, Walker heads up the GAO, a legislative agency founded in 1921 whose mission is to help improve the performance and assure the accountability of the federal government to the American people. The GAO is an agency that was created to review the operations of the federal government in a fair and fact-based way. The lengthy term of the comptroller general is designed to give the GAO a continuity of leadership and independence. This allows the agency to consider long-term and cross-governmental issues and warn policymakers about problems looming on the horizon. Organized, methodical and efficient, Walker is also that ultimate oxymoron: a passionate accountant. Before becoming comptroller general, Walker had extensive experience in the government and private sector. A certified public accountant, Walker worked between 1989 and 1998 at Arthur Andersen LLP, where he was a partner and global managing director of the human capital services practice. He was also a member of the board of Arthur Andersen Financial Advisors. While working as a partner at Arthur Andersen, Walker served as public trustee for the Social Security and Medicare programs from 1990 to 1995. He was assistant secretary of labor for pension and welfare benefit programs from 1987 to 1989, and in 1985, he served as acting executive director of the Pension Benefit Guaranty Corp. He has also worked at Price Waterhouse, Coopers & Lybrand, and Source Services Corp., an international human resources consulting and search firm, in addition to writing extensively about retirement issues. The GAO is involved in a wide range of issues, including national security and foreign policy matters. For example, it has researched and written reports about global market forces, emerging threats, military capabilities and readiness, and the advancement of U.S. interests. Walker, representing the GAO, was also prominently involved in litigation with Vice President Richard Cheney regarding Cheneyís energy task force. Walker argued that Cheney should release some records about the task forceís deliberations to his agency for a study the GAO was conducting on behalf of Congress. Walkerís central concern now is the parlous state of U.S. budget and tax policy. ìClearly the status quo is unsustainable and difficult choices are unavoidable. And the longer we wait, the more onerous our options will be and the less transition time we will have,î he said. ìOne of the first things you have to do is to help people understand where we are and where weíre headed. Until people understand we have a problem and are on an unsustainable path, itís unrealistic to expect they are going to address it.î Walker said the past fiscal year shows how bad Americaís budget situation is. Even though the U.S. economy grew at a robust 4.4 percent, the nation still had a record federal budget deficit of $412 billion. Additionally, Congress passed and the president signed a prescription drug bill that will be massively expensive in the future. Walker noted that the federal governmentís implied and explicit financial debts and obligations total a staggering $43 trillion. And just in the last year, these obligations increased by $13 trillion, largely because of the new Medicare prescription drug benefit. Seeking to put this $43 trillion figure in perspective, Walker explained that the estimated net worth of every American, including Bill Gates and other billionaires, is about $47 trillion. Put differently, the current debt burden for every American is more than $145,000 and about $350,000 for each working American. ìBy continuing to run huge budget deficits, America is partially ceding control over its own destiny to others,î Walker said, adding that since 1993, the share of publicly held debt owned by international investors has more than doubled from 19 percent to more than 40 percent. Last year, international investors purchased nearly $399 billion in U.S. Treasury securities. The comptroller general convened a meeting of business and government leaders last year to ponder how the countryís budget circumstances can be better explained to the American public. He concluded that the nationís debt burden must be made as tangible as possible and the fiscal challenge should be framed in fresh terms. ìThe numbers are mind-boggling, but this is not really about numbers. Itís about valuesóvalues such as prudence, fiscal responsibility and stewardship. Itís about our responsibility to future generations,î he said. As comptroller general, Walker is frequently called upon by Congress to report on and testify about the nationís budget challenges. This year he has been invited to the Capitol often to discuss the financial problems facing Social Security. Walker said itís very important for Congress and the president to take steps to overhaul Social Security, the countryís largest spending program, which provides benefits to tens of millions of elderly and disabled Americans. ìIf we can demonstrate to the markets, the American people and other responsible government officials that we can address a large, known and growing problem like Social Security before we hit the wall, that can be a credibility builder and a confidence builder to help us deal with other and larger challenges like Medicare,î he said. But Walker added that the U.S. congressional debate on Social Security stumbled out of the starting blocks, focusing on the peripheral issue of private accounts for individuals rather than the enormous solvency challenges facing the program. ìWe got off to a bad start because the debate did not begin by convincing people we have a large and growing problem that would be prudent to solve. Instead, we started out talking about a potential element of the solution, individual accounts,î he said. ìIt got off to too much of an ideological start with a partisan slant and hopefully it can get back on track. Clearly, itís prudent to address this issue sooner or later.î Walker is also urging Congress and the White House to confront the nationís soaring health care costs, which threaten to swamp the federal budget. He said the single biggest domestic challenge is health care, of which Medicare and Medicaid are a big part. Between 1990 and 2000, health care spending in the United States rose from about $700 billion to $1.3 trillion. Spendin g on health care is projected to more than double again by the end of the decade. Walker recently released a report that urges policymakers to conduct a comprehensive review of the annual federal budget. He observed that the federal government now spends more than $2.5 trillion each year on a wide range of programs and operations, provides hundreds of billions of dollars in tax preferences, and issues thousands of pages of regulations. And it does all this without having adequate knowledge about whether federal policies, programs and activities are making a real difference. ìWe need a top-to-bottom review of government activities to ensure they are still relevant in the 21st century,î he argued. ìWe need to look at the base of government and ask why we have these programs. Many have been in place for decades and havenít been questioned. Itís time we questioned them.î Part of Walkerís job is working with other national accounting agencies, exchanging information and analytical tools. ìWe face a lot of shared challenges across the world today. We need to share knowledge and expertise to maximize the chances of success and minimize the chances of replicating someone elseís failures,î he said. ìAnd while the United States leads in a number of areas, we donít lead in all areas. In fact, there are areas where we are laggards, such as K-12 education and health outcomes.î Walker said his work as comptroller general is deeply fulfilling, allowing him to work for a model federal agency and have an impact on public policy. ìThis is a truly unique job. You can make a big difference. Youíre here long enough, you have enough job security that you can take on tough issues, stick with them, do things right and hopefully make a difference to the country. I feel good about where we are. Weíre making a big difference. The GAO is an island of integrity in a sea of instability.î John Shaw is a contributing writer for The Washington Diplomat.