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On Aug. 7, 2007, the comptroller general of the United States, David Walker, issued an unusually somber proclamation concerning long-term problems confronting the United States — and he wasn't talking about Islamic radicals.  --  Not only are American fiscal practices unsustainable, “on a path toward an explosion of debt," but "[c]urrent U.S. policy on education, energy, the environment, immigration, and Iraq also [is] on an 'unsustainable path,' he said in an assessment of the future of the United States, the Financial Times of London reported on Aug. 14.[1]  --  "Drawing parallels with the end of the Roman empire, Mr. Walker warned there were 'striking similarities' between America’s current situation and the factors that brought down Rome," Jeremy Grant wrote, "including 'declining moral values and political civility at home, an over-confident and over-extended military in foreign lands, and fiscal irresponsibility by the central government.'”  --  "Mr. Walker said he would offer to brief the would-be presidential candidates next spring.  'They need to make fiscal responsibility and inter-generational equity one of their top priorities.  If they do, I think we have a chance to turn this around but if they don’t, I think the risk of a serious crisis rises considerably.'”  --  Given the identity of the author and the urgency of the message, the coverage given this announcement was remarkably minimal, a GoogleNews search suggests.  --  Such a search conducted on Aug. 22 indicated that so far the only U.S. media outlets to mention it have been USA Today, the Pittsburgh Tribune-Review, the Florida Times-Union, the Roanoke Times, the Tucson Citizen, the Charleston (SC) Post Courier, and the Village Voice, the web sites renewamerica.us, Minyanville.com, and eMaxHealth.com, and the Rutherford Institute (no doubt we've missed a few).  --  As for the New York Times, the report has not yet been judged "news fit to print."  --  On Tuesday and Wednesday, the Financial Times posted a column by Walker, expressing the same ideas.[2]  --  The full fourteen-page report, entitled "Transforming Government to Meet the Demands of the 21st Century, laying out the argument in greater detail, can be viewed here in a .pdf file.  --  NOTE: UFPPC's book discussion group, "Digging Deeper," will be taking up a number of books making the Rome-U.S. comparison in January 2008....


1.

World

LEARN FROM THE FALL OF ROME, U.S. WARNED
By Jeremy Grant

Financial Times (UK)
August 14, 2007

http://www.ft.com/cms/s/0/80fa0a2c-49ef-11dc-9ffe-0000779fd2ac.html

The U.S. government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration, and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned.

David Walker, comptroller general of the U.S., issued the unusually downbeat assessment of his country’s future in a report that lays out what he called “chilling long-term simulations.”

These include “dramatic” tax rises, slashed government services, and the large-scale dumping by foreign governments of holdings of U.S. debt.

Drawing parallels with the end of the Roman empire, Mr. Walker warned there were “striking similarities” between America’s current situation and the factors that brought down Rome, including “declining moral values and political civility at home, an over-confident and over-extended military in foreign lands, and fiscal irresponsibility by the central government.”

“Sound familiar?” Mr Walker said. “In my view, it’s time to learn from history and take steps to ensure the American Republic is the first to stand the test of time.”

Mr. Walker’s views carry weight because he is a non-partisan figure in charge of the Government Accountability Office, often described as the investigative arm of the U.S. Congress.

While most of its studies are commissioned by legislators, about 10 per cent -- such as the one containing his latest warnings -- are initiated by the comptroller general himself.

In an interview with the Financial Times, Mr. Walker said he had mentioned some of the issues before but now wanted to “turn up the volume.” Some of them were too sensitive for others in government to “have their name associated with.”

“I’m trying to sound an alarm and issue a wake-up call,” he said. “As comptroller general I’ve got an ability to look longer-range and take on issues that others may be hesitant, and in many cases may not be in a position, to take on.

“One of the concerns is obviously we are a great country but we face major sustainability challenges that we are not taking seriously enough,” said Mr. Walker, who was appointed during the Clinton administration to the post, which carries a 15-year term.

The fiscal imbalance meant the U.S. was “on a path toward an explosion of debt.”

“With the looming retirement of baby boomers, spiralling healthcare costs, plummeting savings rates, and increasing reliance on foreign lenders, we face unprecedented fiscal risks,” said Mr. Walker, a former senior executive at PwC auditing firm.

Current U.S. policy on education, energy, the environment, immigration, and Iraq also was on an “unsustainable path.”

“Our very prosperity is placing greater demands on our physical infrastructure. Billions of dollars will be needed to modernize everything from highways and airports to water and sewage systems. The recent bridge collapse in Minneapolis was a sobering wake-up call.”

Mr. Walker said he would offer to brief the would-be presidential candidates next spring.

“They need to make fiscal responsibility and inter-generational equity one of their top priorities. If they do, I think we have a chance to turn this around but if they don’t, I think the risk of a serious crisis rises considerably.”

2.

AMERICA RISKS THE FATE OF THE ROMAN REPUBLIC
By David Walker

Financial Times (UK)
August 22, 2007

http://www.ft.com/cms/s/0/7e30665c-5047-11dc-a6b0-0000779fd2ac.html

The U.S. is a great nation, possibly the greatest of all time. Yet to keep America great, policymakers must learn certain lessons from history, notably the downfall of the Roman republic.

The world has changed dramatically in recent years. The U.S. is currently the sole superpower on earth but that exclusive status is likely to be short-lived. While the U.S. is number one in many things, from the size of its economy to military might, it faces several big sustainability challenges.

America's fiscal, healthcare, education, energy, environment, immigration, and Iraq policies are in need of review and revision. Timely action is needed because Washington's historical crisis-management approach to dealing with hard public policy choices is no longer prudent.

From a fiscal perspective, a few vital statistics underline the problems. First, while short-term federal deficits are coming down, they are still too high given the impending retirement of the "baby boomers" and the fact that the cost of the global war on terrorism accounts for just a fraction of U.S. operating deficits. In fiscal 2006 the war cost was about $100bn compared with a total operating deficit of about $434bn.

Second, the nation's total liabilities and unfunded commitments for pension and health programs for the elderly (Social Security and Medicare, respectively) have mushroomed from about $20,000bn to about $50,000bn in the six-year period ending in fiscal 2006, driven largely by the passage of the Medicare prescription drug benefit and the failure to impose planned Medicare cost controls.

Furthermore, many believe that the assumptions for long-term health cost increases used to calculate these Medicare numbers are too optimistic. Despite these sobering facts, some members of Congress are trying covertly to eliminate the current provision designed to control Medicare spending as part of unrelated legislation pending in Congress. When will common sense come to Washington?

The U.S. has faced big challenges in the past and it has always risen to them. However, we must not take comfort in our nation's current superpower status and past success. For a lesson in what we should avoid, we must learn from history. In this regard, the Roman Republic fell for a number of reasons and three in particular resonate today.

First, there has been a decline in moral values and political civility at home. Examples include the devaluation of life, greater self-centeredness by individuals, and increased partisanship and ideological divides in Congress.

Second, we now have an overextended military around the world. While the U.S. military is unmatched as to its capabilities, it is under stress and stretched very thin.

Last, there is fiscal irresponsibility by the central government. Our debt ratios are set to increase dramatically when the baby boomers retire.

What type of actions are needed?

First, the next president should make the issue of "fiscal responsibility and intergenerational equity" one of his/her top priorities. This includes reforming Social Security, healthcare and our tax systems. Tax reform should aim to improve the simplicity, credibility, and equity of the system.

It is also vital that a few courageous and credible champions emerge in both houses of Congress and from both parties to work with the new president to make long-overdue reforms happen.

While it is highly unlikely that big reforms will occur during the balance of the Bush administration, some meaningful progress can and should be made before January 2009. Elected officials should work to pass tough budget controls to help slow our fiscal bleeding. They should also work with the Government Accountability Office to enhance transparency regarding our longer-range fiscal challenges, targeting current financial reporting practices and budgeting processes. Last, they should create a capable, credible, and bipartisan commission to set the stage for significant reforms in 2009.

These actions would enhance our chances for meaningful reform. They would also improve respect for and confidence in elected officials, whose approval levels hover near historical lows. As George Washington once said, we should avoid "ungenerously throwing upon posterity the burdens that we ourselves ought to bear." U.S. elected officials should heed these words, learn from history, and start making tough choices to ensure that the U.S. is the first republic to stand the test of time.

--The writer is comptroller general of the United States and head of the U.S. Government Accountability Office.