Thursday, August 30, 2007

America's economic disaster

David Walker is not running for office. He's not pushing partisan politics. He is head of the Government Accountability Office, an investigative arm of Congress that audits and evaluates the performance of the federal government. He's the comptroller-general of the US, the nation's accountant-in-chief.

David Walker is sounding an urgent warning: America is headed down a path to financial ruin. Says Walker, "This is about the future of our country, our kids and grand kids. We the people have to rise up to make sure things get changed."

While America's politicians debate the wisdom of the war in Iraq, and which party is tougher on terror, and whether or not to cut taxes, what they don't talk about is a dirty little secret that everyone knows. The vast majority of economists and budget analysts agree that the US is now on a disastrous course, and will hit economic disaster if nothing is done to correct it.

There's a good reason politicians don't like to talk about the nation's long-term fiscal prospects. The subject is short on political theatrics and long on complicated economics, scary graphs and very big numbers. It reveals serious problems and offers no easy solutions. Anybody who wants to deal with it seriously would have to talk about raising taxes and cutting benefits, bad news that will likely doom any politician.

David Walker is committed to touring the nation through the 2008 elections, talking to anybody who will listen about the fiscal black hole Washington has dug itself. He's dubbed his campaign the "Fiscal Wake-Up Tour". He decries the recklessness of borrowing money from foreign lenders to pay for the operations of the US government. The overwhelming "tsunami" (he calls it) will come when the baby boom generation begins retiring.

Walker's basic message is this: If the United States government conducts business as usual over the next few decades, a national debt that is already $8.5 trillion could reach $46 trillion or more, adjusted for inflation, and could paralyze the US economy. According to some projections, just the interest payments on debt that big would be as much as ALL the taxes the government collects today.

Walker says the US can be likened to Rome before the fall of the empire. America's financial condition is "worse than advertised" and it has a "broken business model." It faces deficits in its budget, its balance of payments, its savings, and its leadership. And every year that nothing is done about it, the problem grows by $2 trillion to $3 trillion.

Nobody denies what David Walker is saying, not even Federal Reserve Chairman Ben Bernanke. The presidential candidates shy away from the subject, as if it was simply not there. Who will do anything about it? And when? Watch this 60-Minutes' video and open your eyes to the sober truth:

Now don't take this video to mean Bill Clinton was right and George W Bush is wrong. BOTH are destroying our country. But there are two advantages for Clinton: the majority of his term was held by the opposing party majority in Congress, the majority of Bush' term was held by the same party majority in Congress; and Clinton was president in the 1990s, Bush is president in the 2000s (i.e., Baby-Boomers will start to retire in 2008). If Hillary becomes president (I hope and pray she doesn't!), she won't have the advantages her husband did.


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