Walker: Our Real National Debt Is $70 Trillion
EAST HARTFORD — Government is currently not representative of, or responsive to, the public and we are dominated by special interests, big money, and career politicians, former U.S. Comptroller General David Walker told the East Hartford Chamber of Commerce at Goodwin College on Thursday.
The Connecticut resident who recently returned from a 34-day, 27-state, 9,500-mile fiscal responsibility bus tour, gave a sobering talk about the fiscal state of the American economy.
The collapse of Wall Street and the housing market had a profound impact on Walker personally. His daughter lost a job, his son lost his home, and he and his wife lost a significant part of their personal net worth.
“The question is, who’s been held accountable?” Walker said. “The answer is ‘nobody.’”
The man who was first appointed by Bill Clinton and continued to serve under George W. Bush’s administration said the federal government hasn’t done what it needs to do in order to prevent another economic collapse.
“The biggest deficit we have in this country today is a leadership deficit,” Walker said.
He said Congress has acted with a timely budget and appropriation bills four times in his lifetime. Walker is 61 years old.
But the problem is not what we see, it’s what we don’t see, he said.
The national debt has climbed from $5.6 trillion in 2000 to $16 trillion, but “low-balls the problem because it ignores unfunded civilian and military pensions, unfunded Social Security and Medicare benefits, and a range of other contingencies,” he said.
By his estimate the U.S. government has about $71 trillion in unfunded liabilities and that number will grow $100 billion a week if nothing is done.
But it’s not too late.
He said the American people are a lot smarter than many politicians realize, and they know we have a serious problem and are disgusted with the hyper-partisanship and ideological divide in Washington and they will reward politicians who find nonpartisan, bipartisan solutions to move forward.
“They’re willing to accept tough choices with regards to spending and taxes as long as they are part of a comprehensive plan and fair,” Walker said.
He said 97 percent of a representative group of citizens in Ohio and Virginia, two swing states, said the federal government’s financial condition should be a top priority for the president and Congress.
“Yet only 8 percent have any confidence that the current line up will get it done in 2013,” Walker said.
“The people are ahead of the politicians,” he said.
Walker, who heads the Comeback America Initiative, said the government must reduce defense spending, reform Social Security and Medicare, and broaden the tax base both at the top and the bottom.
How do we get there and what does it mean for someone making between $150,000 and $200,000 a year?
He said the government has to bring back the tough budget controls from the Clinton administration and prohibit the government from debt spending on expansion of government programs and tax cuts.
Second, reform Social Security. Walker suggested increasing the benefits for people near the poverty level, increasing them somewhat for upper and middle income earners, gradually increasing the retirement ages, increasing the taxable wage based cap, and then adding a supplemental savings account on top of that.
“It’s an add on, not a carve out,” Walker said. “The second word is security, not opportunity.”
He said the government “way over-promised on healthcare” and believes Obamacare will cost much more than estimated.
He said government is always going to do more for the poor, disabled, and veterans. Where it runs into problems is when it promises too much to everybody, he added.
As far as taxes are concerned, Walker has suggested broadening the base and lowering the rates. He asked the audience of more than 50 business leaders if they do their own taxes by hand without the help of software.
One woman raised her hand.
“If you have a vast majority of people who can’t prepare their tax returns without assistance, you have an unacceptable tax system,” Walker, a certified public accountant, said.
Walker suggested getting rid of most exemptions and deductions, reducing the tax rate to 25 percent for individuals, corporations, and estates, and “you can make the numbers work.”
He would keep the exemption for charitable contributions, because if government’s going to do less, then those charities became even more important for the neediest citizens. He would keep the home mortgage deduction for the first home, but eliminate it for any second homes.
If he could get those exemptions and lower the tax rate to 25 percent, then he would eliminate the difference between the tax rate on earned income and the lower 15 percent tax rate on dividends and capital gains.
“The reason that the top one percent only pay about an 18 percent tax rate is because they disproportionately benefit from deductions, credits, and exclusions and most of their income is earned through capital gains and dividends,” Walker said. “If you can get the top tax rate down to 25 you can eliminate that differential without an adverse impact.”
On the other hand, Walker also doesn’t believe you can have 46.4 percent of Americans paying zero income tax when the income tax supports substantially all of the constitutional role of the federal government.
“You gotta have people with skin in the game,” Walker said. “You’ve got to be able to increase the effective tax rate of the wealthy, but how you do it matters.”