Here at DITH, the topics are normally pretty light. However, today I have come across some information that you just aren’t hearing anywhere else and you need to. It quite literally involves the financial survival of our nation. Please realize that I don’t make such a statement lightly. I know this is going to be pretty dry information and not something any of us wants to think about. But please bear with me through this. This is an important topic.
Setting the Stage
The Government Accountability Office (GAO) is a federal office charged with keeping the government’s financial books and keeping government accountable to the people. David Walker is the Comptroller General of the United States–basically the head accountant for the federal government. This is a non-partisan, professional position. He was appointed by President Clinton and was unanimously confirmed by the Senate. I say all of this so that we can establish that this is not a politician and that he has nothing to personally gain or lose by the information he is sharing.
Mr. Walker has been on a Fiscal Wake-up Tour since 2005, and will continue through the elections. He is attempting to educate the public on the dire financial straits the US government is in. His hope is that if we are aware of the situation, that we’ll demand action from our elected officials. Let’s look at a some of the information he is sharing.
Cooking the Books
You probably heard that the federal deficit decreased from $412 billion in 2004 to $318 billion in 2005. That is technically true using the cash accounting method. However, using the accrual method (the method the federal government requires businesses to use), the actual 2004 deficit was $616 billion and it increased to $760 billion in 2005. You see, the federal government keeps two sets of books: one that the politicians share with us and another that they are required to use when accepted accounting methods are needed (dealing with bond markets, etc.)
Okay, how about the debt? You’ve probably heard that it’s just over $9 trillion dollars right? Again, that’s technically correct. That is our current outstanding debt. Once again, corporate America could not get away with this kind of accounting. What the politicians are not telling you as that we have about $46 trillion in unfunded commitments. That is, we have a $46 trillion shortfall in our upcoming commitments to Social Security, Medicare, and Medicaid (that is up from $20 trillion in 2000). Add our unfunded commitments and our debt, and our actual liability is about $53 trillion. That’s a big number. Let’s put it in perspective: If we divided it up, that would be $411,000 per US household.
The Grim Future
That’s all very alarming and disturbing, but it is an important setup for a look at the future. According to GAO projections, by 2015 federal spending on just Social Security, Medicare, Medicaid, and Interest will consume nearly all of the revenue coming in. And that’s assuming that no new programs are added in the interim.
We are on a path that is simply unsustainable. We have heard for many years that the entitlement programs are growing. Our politicians promise reform, but then fail to do so. We are at the end of our rope. Mr. Walker thinks we have 5 to 10 years at most before it all comes collapsing down.
Well, it’s not going to be easy. It’s going to be painful for all of us. Those who think our economy will grow enough to solve the problem are kidding themselves; tax increases alone won’t solve it–this would require an immediate $11,000 per year increase per household; cutting programs alone won’t solve the problem, and the pain would be far too deep. In fact, it’s going to require a combination of all 3. The sooner we get started the better, because the price tag gets higher every day we wait.
So What Can You Do?
Mr. Walker has been a lone voice in the wilderness on this. He has been trying to get the word out, but the media has largely ignored it. Our politicians aren’t going to talk about it of their own accord, because bad news doesn’t get votes. We need to do everything in our power to get out the word and then force our elected officials to act quickly and decisively.
Here are some thoughts on what you can do:
- Check out Mr. Walker’s 11-minute talk on this topic. I know it’s a lot of time to ask you to invest, but he lays it out very nicely and has graphics to help illustrate his points.
- If you have the time and interest, his Fiscal Wake-up Tour page has some other presentations and information.
- Make a similar post on your blog. If you don’t have the time to write new material, copy my post. This is too important for me to worry about plagiarism.
- Talk to people
- Write a letter to your newspaper
- Talk to every elected official you can and demand immediate action
- Talk with those running for office to make sure they are on the correct side of this issue