Our financial forecast changes … from bad to worse
David Walker is an equal-opportunity doomsayer.
Democrats and Republicans, presidents and congressional leaders, young and old, rich and poor -- in Walker's eyes, they're equally responsible for the financial mess we're in.
And by "mess," he isn't talking about our current economic crisis. As bad as that is, it looks like a walk in the park compared to what Walker sees on the horizon.
We've talked about all of this before -- the massive entitlements, the oncoming wave of baby boomer retirements, the broken and bloated health care system. That was in late 2008.
Today, everything is worse.
- The U.S. deficit, which sat at $459 billion in 2008, will approach $1.8 trillion in 2009.
- Our debt doubled during George W. Bush's presidency. It could double again while President Obama is in office.
- Fully half of that debt is held by foreign lenders.
- Our total liability for Medicare and Social Security is $56.4 trillion. That's $483,000 for every household in the country.
"We face a range of extraordinary challenges," Walker, former U.S. comptroller general and current president and CEO of the Peter G. Peterson Foundation, told a crowd of state CPA society representatives during the AICPA's annual Interchange Conference. "We will need extraordinary processes to meet these challeges."
Whether we're getting those extraordinary processes is up for debate.
Walker says an economic stimulus was absolutely necessary, but he says it also needed to be "timely, targeted and temporary." What we got, he said, was anything but.
"There are three Management 101 principles," he said. "When spending a lot of money, you'd better have clearly defined objectives, criteria for who gets the money, and conditions for what you can and can't do with the money before it flows. We're 0 for 3. ... We must learn lessons from all of this and make sure we have the right systems and controls in place upfront."
He also had some pointed opinions about the debate over health care reform. According to Walker, the question isn't whether we need health care reform; it's how to do it.
"Yes, we need health care reform," he said. "But you cannot reduce costs by expanding coverage. That is an oxymoron. Washington is building totally unrealistic expectations of what can be achieved. ... We need some sort of universal coverage that is sustainable over time. We can do it, but we need to engage the American public with the truth, facts and tough choices."
The good news, Walker said, is that President Obama seems willing and capable of making those choices. But he accused Obama "of still (being) in campaign mode, (of) trying to do too much too fast."
"Yes, America can come back. Our future can be better than our past," he said. "But we won't unless we start making tough choices sooner rather than later and we have some leaders who are willing to lead."
Walker gave me some additional insights during an exclusive interview after his keynote. Listen to what he has to say in this CPA Spotlight podcast.
- Subscribe to our podcast here, or search for "CPA Spotlight" in iTunes.
What do you think: Are we making progress, or just making more of the same mistakes? Let us know, then check out these related resources: