'.....by 2040 Our Government Could Only Have Resources to Mail Out Social Security Checks and Pay Interest on the National Debt.'---GAO Comptroller General

By Joe Rothstein
Editor, USPolitics.einnews.com

December 18, 2007

The looming federal debt crisis hasn't made it onto many candidate web sites, or to prominence in their speeches or TV spots. Small wonder. Telling voters that the nation soon will have to take harsh fiscal measures is akin to spooning up political cod liver oil. The body politic may need it to stay healthy, but few voters even know that their political body is on the verge of being very sick.

During the presidential campaign Republican candidates have been more willing than Democrats to talk about lower federal spending and balanced budgets. But that comes largely from their common view that the smaller the government the better, not necessarily because they see a financial Armageddon just down the road.

And lest we forget, most of the $9 trillion federal debt we now struggle to pay was run up under the presidencies of Ronald Reagan and two members of the Bush family. When Reagan took office the federal debt was only $700 billion. Twelve years later, when George Bush the First left office, it was $4 trillion. George W. has added another $3.5 trillion....so far. The Republicans talk a good fiscal responsibility game, but they smell up the stadium when they actually run the team.

The Republican legacy of irresponsible budget management is a big problem, but only one aspect of the potential financial train wreck that could be ahead. How big a wreck? In a report issued the other day David Walker, the Comptroller General of the U.S. Government Accountability Office, described it this way:

"Without meaningful action, by 2040 our government could only have the resources to do little more than mail out Social Security checks and pay interest on the massive and growing national debt."

In a masterful understatement, Walker added, "This is obviously an unacceptable scenario."

The problem isn't so much today's unbalanced budget, which is relatively small compared with the size of the U.S. economy. The problem goes much deeper: a quarter of a century of charging future costs to the national credit card; a series of tax cuts that reduce our ability to make payments on that charge card; diverting money collected to pay for Social Security to instead pay for the day-to-day business of government; and failure to make sense of the national health care system, which has created a huge gap between Medicare obligations and our ability to pay for them.

Speaking at the National Press Club in connection with the release of his report, Comptroller General Walker estimated that already 62% of the federal budget goes to pay for debt service, Social Security, Medicaid, and other costs that represent long term obligations. The long-term cost of these obligations is estimated at $53 trillion, $20 trillion more than when George Bush took office. $9+ trillion of that alone comes from the drug industry-friendly Medicare prescription drug program Bush and the GOP Congress created.

Would eliminating earmarks solve this problem? Not really, says Walker. Earmarks just move decisions on where to spend about 1 to 2% of the budget into congressional hands and out of the realm of federal agencies.

Would fixing Social Security solve the problem? It would help some. But the long term Social Security obligation is just $6.8 trillion of the $53 trillion total. And when political leaders sit in a room out of public view they admit to one another that the Social Security gap could be closed in any number of ways without causing much financial pain to either the recipients or to current young payers.

What would solve the problem is a cocktail mix of the following:

1. Shutting down the war costs and exerting discipline over current federal spending to stop the bleeding now and in future years. That is, balance the budget, which this year, if we were to get an honest count without accounting tricks, we'd see is running $350 billion in the red.

2. A top-to-bottom review of the federal government, its programs, its contractor outsourcing and other expenses to bring it into line with good management practices.....with a serious resolve to eliminate or consolidate sacred cow programs that have outlived their usefulness, and streamline delivery of services for those that remain.

3. And most important, since our public and private health costs represent by far the greatest expense we face, rationalizing the nation's health care system to cover everyone with an agreed upon cap on overall spending. (For more on this see my November 15, 2997 column: Here's Another Looming Catastrophe: The Unsustainable Cost of Our Current Health Care System.)

For much of the past year the Concord Coalition, a group dedicated to bringing sanity back to federal spending, has been conducting what it calls "Wake Up Tours" throughout the U.S. on the looming federal spending crisis. The Brookings Institution, the Heritage Foundation and other groups spanning the political spectrum have been cooperating in this effort. The idea is to build a grass roots base of bottom-up support for the major changes needed to save the nation from its excesses.

No one really expects much progress until George W. Bush and his wrecking crew leave office. Bush seems oblivious to the problem. Cheney was recently quoted as saying "deficits don't matter." The budget Bush has insisted on from Congress eliminates methods for balancing current expenses. Latest case in point, he and the GOP congressional minority held out for an AMT fix that adds $50 billion to the debt, rather than accept the Democrats' plan for replacing that lost revenue.

Ominously, all the Republican presidential candidates seem to buy into the fantasy that cutting taxes will raise the money needed to bridge the current fiscal gap. All except Huckabee, who would eliminate the IRS all together and replace it with a 23% across-the-board sales tax.

The "Wake Up Tours" are designed to get the attention of these candidates and drive some sense into them, along with providing political cover for whomever emerges as president. Such cover will be essential to put some steel in the spine of the next president and members of congress who need to convince the public about the need for that big dose of cod liver oil.

The nation isn't in much of a mood to pay more in taxes, particularly since it has so little confidence in the integrity and judgment of either President Bush or the current congress. People need to believe that their leaders are working to solve current problems before they will be willing to accept the unpleasant solutions required to stave off future calamity.

As Comptroller General Walker says, running out of money to pay for the federal government is "an unacceptable scenario." And if 2040 sounds a long way off to you, it's about the same number of years going forward as it's been since Reagan became president and began taking us backward.

Joe Rothstein, editor of US Politics Today, is a former daily newspaper editor and long-time national political strategist based in Washington, D.C.

See all previous articles by Joe Rothstein here.