Fiscal Meltdown Ahead

Via Tax Analysts:

GAO Chief Again Warns Tax Increases May Be Necessary

U.S. Comptroller General David Walker on December 12 opened a White House conference on aging with a warning that will be unwelcome to a president known for his tax-cutting ambitions: Raise taxes to avoid a fiscal meltdown.

"While nobody likes tax increases, including me . . . in the final analysis, over the longer term, you have to have enough revenues to pay your current bills and deliver on your current promises," he said.

According to Walker, the retirement of the baby-boom generation will put such a strain on the federal budget that tax increases will have to be part of the solution.

With a 15-year term as head of the Government Accountability Office, Walker enjoys a degree of insulation from repercussions for politically unpopular stances. In late October he called for allowing some of President Bush’s tax cuts to expire, and at the December 12 conference on aging he renewed a campaign against tax preferences that began with a stinging GAO report in September.

"Part of the problem is the way we keep score in Washington," Walker said. "Tax preferences are largely off the radar screen even though they amount to $700 to $800 billion a year in forgone revenue."

An audio/video feed of the conference can be found here. Walker's presentation begins at about 50 minutes into the feed. Walker's principal lesson "The past cannot be prologue." He notes that in the last 4 years, the unfunded liabilities of the federal government rose from $20 trillion (Yes, with a "t." According to Merriam-Webster "a very big number.") to $43 trillion. The unfunded debt is beginning to approximate the $48 trillion in total net worth of all Americans.

The status quo is not an option. . . . There is no way that we're going to grow our way out of this problem.

* * * * *

"While nobody likes tax increases . . . . In the final analysis, over the longer term, you have to have enough revenues to pay your current bills and deliver on your future policies."

Admittedly, the presentation appeals to policy wonks, but it is startling to see a mild-mannered, green eyeshade type get really angry.