According to former U.S. Comptroller General David Walker, the budget showdown and looming federal government shutdown is an irrational fight over a relatively insignificant issue. “It’s like politicians in Washington are on the Titanic arguing over the bar tab while we’re heading toward the iceberg ready to sink the entire ship.”
Walker, who was introduced as a “fiscal realist and not an idealist” at a plenary panel: Solving the U.S. Debt Crisis, at CU Boulder’s annual Conference of World Affairs, argued that the deficit, if left unchecked, could be catastrophic for the United States. To reach a solution, Walker argued that both parties will have to come together to restore fiscal responsibility to the federal government.
Since stepping down from his government position in 2008, Walker has publicly campaigned to restore fiscal responsibility to the federal government.
“We need to mobilize the center-right and center-left to stop the wing nuts of the far-right and far-left from driving us off a cliff,” said Walker.
Currently, the debt stands at over $14 trillion dollars and is fast approaching the legal limit of $14.294 trillion. Congress must soon act to raise the debt ceiling if they wish to avoid defaulting on loans and the catastrophic economic ramifications that would entail.
However, according to Walker the real issue is not the current debt but the upcoming crisis of unfunded Medicare and entitlement promises, which could raise the federal debt by as much as $40 to $50 trillion.
Shifting demographics and rising health care costs are driving the crisis. By 2030, there will be a ratio of around two working Americans to support every Medicare recipient, he said.
According to Walker, neither Democrats nor Republicans have provided a feasible solution that really addresses all aspects of the looming crisis. “To reach statutory budget controls, everything must be put on the table.”
Walker says that tax reform that increases revenue and spending cuts will lead the way to salvation.
In regards to comprehensive tax reform, Walker says we must simplify the code while increasing revenue by taxing the rich and closing loopholes that disproportionately benefit corporations and wealthier Americans. He also suggested a consumption tax that would allow the government to capture revenue from individuals who wield vast sums of capital but don’t generate taxable income. Walker also suggested raising the income cap on Social Security to boost revenues.
As far as spending concerns, Walker says that we must limit and reform entitlement programs, such as Medicare, while decreasing discretionary spending, especially in the defense sector. By increasing contributions that wealthy recipients of Medicare contribute to their health coverage, Walker says we could maintain coverage for less fortunate seniors, while taking huge cuts out of the deficit. Defense spending also offers a ripe sector to cut spending according to Walker.
“We spend as much on our military as the next 14 countries combined,” said Walker. “We must reassess, what exactly are we trying to accomplish with our military?”
Walker criticized both Obama’s budget proposal, which he said does not adequately address rising Medicare costs, and Sen. Ryan’s budget proposal, which will not increase tax revenue.
With every newborn baby being born with an implicit debt of $200,000, Walker joked “no wonder babies cry when they’re born,”
However, his tone turned serious as he addressed the impact the debt will have on younger generations. “What is happening to young people is morally reprehensible.”