David Walker Speaks Truth to Powerless
By: BJ Lawson
David Walker, our Comptroller General and head of the Government Accountability Office, is taking his message to the street. Despite his ability to communicate directly to our elected officials in Washington, it appears that he’s just not getting though to our senators and representatives. Perhaps they’re too busy discovering new ways to shelter payments from their favorite lobbyists.
No, instead, he’s decided that he needs to talk to us. That’s right, we the people. The voters who elect these august leaders, and then watch their antics from the comfort of our couch.
Why is he so concerned? He understands that we are wearing a noose that is slowly tightening around our neck. You might not feel it just yet, but it’s there. The government’s own annual report shows a pretty bleak situation: as of 2006, the federal government has $1.5 trillion in assets, but $10.4 trillion in liabilities. But those are just the assets and liabilities “on the books”. Like Enron, we have lots of interesting liabilities that are not on the balance sheet. As I wrote in a discussion over at Redstate:
[The balance sheet] also does not account for the massive unfunded (and unfundable) long-term net liabilities of Social Security and Medicare. I wasn’t going to bring this up, as I didn’t want to depress you, but even the optimistic official estimates are sobering. Look at pages 46-47:
Social Security: ($6.4 trillion)
Medicare Part A: ($11.3 trillion)
Medicare Part B: ($13.1 trillion)
Medicare Part D: ($7.9 trillion)
Railroad Retirement: ($101 billion) <– what a bargain!Add those up… over $38 trillion in long-term liabilities that are not on the balance sheet.
Of course, there are those who try to put things in perspective. Various commenters then tried to reassure me that the balance sheet doesn’t include significant assets, as well — namely the value of land owned by the federal government, and the assets owned by the American people.
OK, so if our government owns a few $trillion in land, and the total wealth of our citizens is estimated at $55 trillion, how does that help us fund these entitlements? I guess we can just sell off the National Park System, and confiscate the majority of private assets and sell those as well. But who will buy them? Perhaps the Chinese? Good plan. I feel much better.
Seriously, check out the presentation U.S. Financial Condition and Future Fiscal Briefing, available at the GAO’s Web site. Or just watch David Walker’s 60 Minutes interview below:
While his message is a wake up call, I actually think he’s too optimistic regarding how much time we have. You see, he’s focused solely on our government’s out of control spending. He’s not considering the impact of our fiscal policies on our place in the global economy. Having spent time in China and seen firsthand the impact of their rapidly-growing middle class, it is clear that China is transforming over the next 4 to 10 years from a low-cost producer and exporter to the world’s most voracious consumer.
We are the world’s largest debtor nation with a population of 300 million, and we will soon be competing for food, energy, natural resources, and manufactured goods with China’s 1 billion consumers. Also consider that China is, slowly, allowing their currency to appreciate. As their middle class grows and domestic consumption expands, their domestic market will become more valuable than export markets. At that point, the People’s Bank of China won’t need to keep their currency artificially low relative to our dollar. So not only will we be competing with their billion consumers, we’ll be competing with a currency that is significantly weaker than it is even today.
Unless we can reign in our government, and again make our nation attractive for investment, it’s going to be a rough ride. Perhaps we the people will wake up in time to realize that we actually do have the power to change the equation.
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