If you don't know who David Walker is, what he has been doing for the last year, or what the GAO stands for, then you need to watch the clips below. Related: http://www.youtube.com/watch?v=I-16u9x3tfE http://www.youtube.com/watch?v=OS2fI2p9iVs PS, anyone still down with Obama's health plan, or Hillary Care needs to have their head examined now that they fully briefed on the situation. Don't think the candidates running are not aware of the situation. They are. It won't stop them from pandering for your vote.
It is worrying when a country's chief accountant leave in such a way. Wonder hows the reactions of the various election candidates?
Billions upon billions of dollars, which were collected by the government as Social security taxes, have been spent to feed the ever-growing war machine, instead of funnelling that cash back to the economy. It is too late to mend this broken economy. Do you believe average Americans would read all this? They'd watch "The Simpsons" instead, and buy that "New SUV" on down payment. Thats how the lifestyle has become.
I believe David Walker has been very appropriate with regard to addressing this issue over the last number of years even as the President, Congress, the candidates don't really address it. The future cost explosions of medicare, medicade and social security are enormous. Of interest these and some other entitlements make up the bulk of the Federal Govt budget. While politicians shout and scream and pander about things like waste, earmarks, pork, etc. you might take all that stuff triple it/quadruple or multiply it by ten and it wouldn't get close to the impact of entitlements. Those are hard numeric facts. I don't have problems with entitlements. I think they are good for the nation in a myriad of ways. There is a reasonable description and some comparison numbers and percentages of entitlements as a percentage of the GDP for a great variety of nations at wikipedia, along with the theoretical descriptions for pros and cons of entitlements: http://en.wikipedia.org/wiki/Welfare_state The data is from the early 2000's and includes the US with a number of other nations with significant social welfare components of their budgets including a good number of European nations, Australia, New Zealand, Korea, Mexico and some others. Relative to those nations the US component of social welfare as compared to GDP was relatively low. The unique problem that the US has is that it way outspends all those nations and the rest of the world with regard to National Defense. The US govt severely faces guns versus butter problems in its budget unlike any other nation. That is a fundamental issue with regard to issues about the US govt budget. I'm old enough to remember that my parents their, brothers and sisters, and friends and peers took care of their elderly parents (my grandparents) when social welfare applications were nowhere nears as extensive as they are today. Get rid of all social welfare geared toward the elderly or infirm and be prepared to either take care of some of your parents/and or have someone in your family take care of you. Of course that has been a practice in societies for thousands of years. I'm also old enough and experienced in a certain industry to be familiar with Blackstone, which is the business whose success and riches ultimately funded the foundation that David Walker joined. Peter Peterson was a founding partner of the firm and when it went public his net worth reportedly jumped into the $2 billion range. He is using a substantial amount of that fortune to fund this foundation. Blackstone was/is a significant investment fund/business with billions of dollars. It got some general publicity for being a hedge fund manager in which the partners are able to take profits and pay federal taxes at a preferred 15% rather than what would be the current maximum rate of 35%. Quite a number of millionaires among hedge fund managers and some billionaires also. Basically these guys manage other people's money with any investment of their own funds so miniscule relative to the size of the investments. In any case they qualify for this incredible advantage in capital gains taxation benefits even though they are probably 99% managers and 1% investors. Blackstone has a diverse portfolio of investments. They used to (I don't know if they still do this) invest in lots of commercial real estate, manage it, and resell it. That is another business that takes advantage of capital gains tax advantages. It is sort of the mega example of buying a house at a low price and selling it at a high price. I was pretty tight with one of the operators from Blackstone and in fact was working as a tenant in one of their buildings. Used to see the guy a bit and talk real estate. During the time they held the building they didn't do anything extraordinary to make the building significantly more valuable. But they held it for a reasonable number of years and then sold the building. During that time that commercial real estate market exploded in value and they made a lot of money. Their profits were enhanced by being able to take advantage of tax breaks for capital gains. Whether these guys were able to take advantage of tax breaks for capital gains or not they would have been in those businesses so long as they had the expertise, experience, savvy, etc. to bet on market conditions and win. They probably would have had the same reaction to hedge fund management with or without the tax breaks. If they could be profitable they would have entered the business. I'm referencing this because the foundation that David Walker joined is large and significantly funded by Mr Peterson whose reported $2 billion fortune is probably twice what it might have been had his various efforts been taxed at rates similar to people who don't or can't take advantage of tax breaks to the extent that he could. It is ironic that this foundation that wants to address and tackle govt. budget issues is financed by someone who is roughly twice as rich as he would have been if he was forced to pay taxes at rates similar to most people. Some of Mr Peterson's wealth would have gone to taxes and some of that money might have paid some of the huge debt that faces the nation now. Multiply his individual wealth by a large number of people who similarly benefitted and maybe some of that can create a significant dent in the extraordinary size of the budget deficits. That is one alternative way to look at things. It is important to remember that in reality some of these profitable businesses would procede with or without the tax benefits that are often established that benefit the wealthy by excusing them from paying taxes at rates that are more in line with most of the population. As to the size of entitlements that are ripping into the budgetary fabric of the US govt: They are huge, and they are growing at extraordinary rates. For instance I read that health care costs relative to entitlements increased during this decade at dramatically higher rates than inflation. Ugh....that particular comment points to higher taxes and bigger drains on the budget and tax payers. Look at some other issues, though. Society/govt./markets frankly aren't controlling the costs of health care. It is one of those items wherein costs are exploding well beyond inflation. That also impacts future budget issues. Another example of a cost that has escalated well beyond inflation over many decades is the cost of a college education. The current problems it causes are being discussed at DP right now at http://forums.digitalpoint.com/showthread.php?t=57749. By reference (and again it points to my age) I went to one of those expensive private colleges (like an Ivy League). At that time, my parents and I split costs somewhat. My folks had either middle class or possibly upper middle class income. My dad could have paid for it without taking on debt. I paid for a big chunk of it through combinations of summer and part time work. If I had paid for it in full, worked more and/or gotten loans for it I could have paid off the loans relatively quickly compared to today and relative to the early lower income I had as a young adult. Another way to look at that is that one of my friends took on all the debt to pay for his two kids in private colleges recently. They are pretty much like the school we went to and his sister went to. I suspect his father paid for the college education for my friend and his sister. I pretty much think my friend's income (including that of a working wife) was similar relative to society and accounting for inflation than that of his father. The education debt load on my friend pretty much got close to bankrupting him. I sincerely doubt that the education debt load on his dad had anywhere close to the consequences on his dad. The relative increase of the costs of a college education are like those of health care in that they have increased dramatically faster than that of inflation and impact a household dramatically more than in the past. I reference this because you can address the costs of health care with regard to its impact on entitlements......and say to the elderly and ill ....that you'll get less in the future by cutting the impact on the govt. and/or you can attack the costs of health care by working to limit the incredible growth rate of the costs in general. Frankly you can do both. In fact you can attack the issues a lot of ways. Again I don't buy into these arguments that the bigger the govt and the more intrusive it is and the more it takes from people by taxing them the worse it is for the economy. It does affect things like that on the margin. But frankly big successful businesses like Blackstone whose huge profit margins and enormous profits to the partners like Peterson who is funding the foundation that David Walker joined.....would continue to do what they are doing with or without the favorable tax status so long as they could strategically find investments where they could "buy low and sell high" or manage lots of other people's money....and in so doing that make a lot of money. Last thought: There is a consequence to limited govt oversight. For instance in this DP thread http://forums.digitalpoint.com/showthread.php?t=708136 it appears from the claims of Spitzer and other articles the federal govt. decided to help its buddies in the banking industry and remove institutions from state regulatory oversight. I'm sure someone somewhere in the Bush administration claimed that doing this was helping industry, helping the economy, creating jobs,....yak yak yak. The consequences are that the US economy has slowed. It might hit a recession. The world wide impact has whipped stock markets across continents. Major national and international financial institutions are taking huge losses. Individuals are losing homes and having their credit worthiness destroyed. Lots of people are miserable and walking around with frowns rather than smiles. Some people are eating less caviar and more lettuce. I don't see how the theory of small govt and less regulation has been helpful at all!!!
Typical liberal propaganda. Construct a strawman to prove capitalists will take advantage of government failure, and then endorse the idea of more government, and possibly more failure as the solution. Capitalism = Bad. Government = Good. Same old liberal nonsense. The problem is that banks had no oversight EXCEPT government, and once again, government failed. Instead of promoting that corporations answer to their customers, liberals prefer to set up bureaucracies, and consolidate "regulation" in the hands of appointed department heads. The liberal answer for everything is spend more money, make more rules. Never a thought to who those rules hurt, or where the money comes from. The art of plugging holes in a dike with someone else's fingers. If you want to remove corruption from government, remove government power. Don't think you can domesticate a tiger by putting him on a leash.