Back to the Future

By: Hon. David M. Walker

It's been said that this election is one that will go down in history. While this year's Presidential election process has already made some history, it is important that both major party candidates reflect on lessons from the past in planning for our future. In this regard, it is instructive to note a few ways in which we have strayed from the principles that our Founding Fathers established at the beginning of our great republic.

At the outset of our nation, the Constitution provided a limited role for the federal government. Most Founders believed that all functions not expressly specified as federal belonged to the states - and that all power ultimately rested with the people.

In 1789, the budget of the federal government represented just two percent of our nation's economy. It now represents over 20 percent and is headed to exceed 30 percent and rising unless we reform existing entitlement programs (e.g., Medicare, Medicaid and Social Security) and put our fiscal house in order.

Today, the scope of the federal government bears little resemblance to the Founders' original intents, and neither do its functions.
While hard to believe, every major responsibility designated for the federal government in the Constitution are contained in the 38 percent of the budget deemed "discretionary spending". These responsibilities include national defense, homeland security, foreign policy, education, the federal judiciary, treasury functions, the postal service, the White House and Congress. As entitlement programs continue to grow on autopilot, the portion of the budget available for these essential government functions will come under increasing pressure.

Mandatory spending, which includes entitlement programs like Medicare, Social Security and interest on the federal debt, now represents 62 percent of the budget and is growing. This part of federal spending, especially the health care portion, constitutes our nation's greatest fiscal challenge. In fact, absent comprehensive and prudent health care reforms, escalating health care costs have the potential to bankrupt America.

Social Security, Medicare and Medicaid already represented 42 percent of the budget in 2007 and that was before any "baby boomers" had retired. Social Security and Medicare alone were underfunded by over $41 trillion dollars as of September 2007, or $136,000 per American in today's dollars. This number continues to grow by at least $2 trillion or $6,600 per American every year. To put things in perspective, current policies imply that total individual taxes would have to more than double from today's levels in order for the federal government to deliver on its promises and pay its bills in the future.

We must wake up, face facts and the stark realization that if we don't put our fiscal house in order, our collective future may not be as bright as our past. Our next President must display the candor and leadership necessary to make tough choices sooner rather than later.

Both major Presidential candidates should make addressing these issues a priority if they expect to help lead us out of our current $53 trillion federal fiscal hole. Specifically, they should commit to: 1) make fiscal responsibility and inter-generational equity a priority; 2) not take anything off the table, including changing entitlement programs or increasing taxes; 3) work on a bi-partisan basis to seek sensible, fair and sustainable solutions; 4) use the "bully pulpit" to speak the truth to the American people about the need for action and the consequences of inaction; and 5) support the creation of a capable, credible and bi-partisan commission to make a range of budget, Social Security, tax and health care reform proposals to the next Congress for an up or down vote not allowing for amendments (similar to the Base Re-alignment and Closure Commission process).

We need a strong President who is willing to sacrifice easy short-term political wins for the long-term health of our country and well-being of American families. However, the ultimate responsibility for what goes on in Washington lies with the American people. "We the People" must do our part to hold our elected officials accountable to ensure that our collective future is better than our past, and that the United States of America is the first republic to stand the test of time.

The Hon. David M. Walker is President and CEO of the Peter G. Peterson Foundation and the immediate former Comptroller General of the United States.

The Peter G. Peterson Foundation is dedicated to increasing public awareness of the nature and urgency of several key challenges threatening America's future and to accelerating action on them. To address these challenges successfully, we will work to bring Americans together to find sensible long-term solutions that transcend age, party lines and ideological divides in order to achieve real results.

The Foundation will work to: address America's budget, savings and current account/trade deficits; reform the federal government's entitlement programs, heath care and tax systems; enhance education, including financial literacy and civic responsibility; encourage greater energy conservation; and promote non-proliferation of nuclear and other dangerous materials.

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