Summary

This speech was given by the Comptroller General before the Mendoza School of Business at the University of Notre Dame in South Bend, Indian, on January 26, 2007. From a fiscal perspective, the facts are clear, compelling, and undisputed. Unless we make changes, and soon, the United States is poised to enter a prolonged period of escalating deficits and rapidly mounting debt burdens. What's at stake is nothing less than our future economic growth, our future standard of living, and even our future domestic tranquillity and national security. Our recent lack of fiscal discipline has only made our challenge more difficult. Despite a drop in the annual budget deficit in 2006, our deficits remain imprudently high. But it's the government's long-term finances that are the real problem. Over the last six years alone, our nation's total liabilities and unfunded commitments, chiefly for Social Security and Medicare, have soared from about $20 trillion to about $50 trillion. Fifty trillion dollars translates to about $440,000 per American household. Keep in mind the median household income in America is less than $50,000 a year! They may not know it, but the typical American family now owes more than nine times their annual income. That's like having a mortgage but no house! While this burden will have to be paid off over many years, the amount continues to grow every day because of continued deficits, known demographic trends, and compounding interest costs. The only asset that some Americans have to address this burden is their American citizenship. Fortunately, U.S. citizenship gives individuals unparalleled opportunities to earn, invest, and reach their full human potential. What we've got brewing is a potent--and toxic--mix of ignorance, apathy, and inaction throughout our society. Unfortunately, too many American leaders and institutions suffer from the dual afflictions of myopia and tunnel vision. And too many individual Americans suffer from shortsightedness and self-centeredness. Our indifference in many areas, including fiscal discipline, cannot continue. If it does, it isn't a matter of "if" but "when" a crisis will occur-- and how bad it will be.

Beyond increasing transparency, what can we do? First, it's crucial that we impose meaningful budget controls on both the tax and spending sides of the ledger. These controls need to apply to tax cuts as wells as to both discretionary and mandatory spending. We also need more transparency and controls over congressional earmarks and emergency supplemental spending. Members of Congress should also have more explicit information on the long-term costs of spending and tax bills--before they vote on them. The Medicare prescription drug benefit, which is turning out to be one of the most expensive government entitlement programs of all time, is a glaring example of what's wrong today. The 2003 legislation came with an $8 trillion-plus price tag, but that fact wasn't disclosed or discussed until several months after the bill became law. We also need to enact meaningful entitlement reforms, reprioritize and constrain other federal spending, and engage in comprehensive tax reform that will generate additional revenues. We should try to minimize tax burdens in order to maximize economic growth, disposable income, and our competitive advantage as compared to Europe. At the same time, we're going to need enough revenue to pay our current bills and deliver on our future promises. To get things moving, we may need to create a bipartisan commission to take up Social Security, tax, health care, and other needed reforms. The commission would be tasked with developing a balanced package of proposed changes for consideration by the President and Congress. This commission wouldn't need to re-invent the wheel. Rather, it could draw on the work of many prior commissions, existing organizations, and various individuals. At a minimum, the results of such a group effort could facilitate more informed and accountable debate in the 2008 election cycle.