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Former U.S. Comptroller General: ‘U.S. Finances Are Out-of-Control’

June 21, 2022
By David Walker

Heartland Daily News interviewed former U.S Comptroller General David M. Walker about the short- and long-term consequences of U.S. fiscal policy and his leadership on the proposed Federal Fiscal Responsibility Amendment to the Constitution.

Heartland Daily News interviewed former U.S Comptroller General David M. Walker, author of America in 2040: Still a Superpower? A Pathway for Success, about the short- and long-term consequences of U.S. fiscal policy and his leadership on the proposed Federal Fiscal Responsibility Amendment to the Constitution.

(The interview has been edited and cut for clarity and accuracy.)

Heartland Daily News: You're spearheading an effort on amending the Constitution. What is the Federal Fiscal Responsibility Amendment, and what are you hoping to accomplish with it?

Walker: The Federal Fiscal Responsibility Amendment is a recognition that our finances are out-of-control. We've gone from less than $1 trillion in debt when Ronald Reagan took office to more than $30 trillion,[i] and knowing that debt-to-GDP [gross domestic product] now exceeds 100 percent of GDP,[ii] only the second time in the history of the country. But that number is really just the tip of the iceberg, because if you count unfunded civilian and military pensions, retiree health care, Social Security, and Medicare, the number is really not $30.5 trillion. It’s $112.1 trillion, and growing faster.[iii]

Heartland Daily News: You mention in your book that this economic threat is also a national defense risk.

Walker: The economy has not been growing lately, so it it's a real problem, and it threatens our economic security, it threatens our national security, and ultimately it threatens our domestic tranquility, if we don't do something about it. Many of us, including myself, had come to the realization that statutory approaches do not work. They have not worked. The debt ceiling is a bad joke. We're the only major industrialized nation that has that, and it doesn't work.

The only way that we believe we're going to be able to get control of our finances is to adopt a constitutional fiscal responsibility amendment.

Many people, when they think of that, they think of a balanced budget amendment, but the federal government is very different from state governments. Forty-nine of the 50 states have balanced budget requirements,[iv] but they do it based on cash flows, not based on the accrual basis, and as a result they’ve got losses and terribly huge unfunded obligations. What we believe is the best approach is public debt to GDP.

(To read the rest of the interview, download the PDF.)

 

[i] United States Treasury, “Historical Debt Outstanding,” accessed June 16, 2022, https://fiscaldata.treasury.gov/datasets/historical-debt-outstanding/historical-debt-outstanding

[ii] St. Louis Federal Reserve, “Federal Debt: Total Public Debt as Percent of Gross Domestic Product, accessed June 16, 2022, https://fred.stlouisfed.org/series/GFDEGDQ188S#0

[iii] An analysis of the federal government’s financial condition in 2020 found a $123.11 trillion public debt burden, when including unfunded Medicare and Social Security benefits. See: Truth in Accounting, “Financial State of the Union 2021,” April 15, 2021, https://www.truthinaccounting.org/library/doclib/Financial-State-of-the-Union-2020.pdf

[iv] Vermont is the only exception. See: National Conference of State Legislatures, “State Balanced Budget Provisions,” Accessed June 16, 2022, https://www.ncsl.org/research/fiscal-policy/state-balanced-budget-requirements-provisions-and.aspx#:~:text=Even%20the%20number%20of%20states,with%20Vermont%20being%20the%20exception

Article Tags
Economy