One of America’s highest-ranking bean counters, U.S. Comptroller General David M. Walker, came to Lansing this week with some blunt messages for every citizen:
• The quickly rising costs of Medicare, Social Security, interest on the federal debt and other long-term obligations “will create a tsunami if we don’t do something about it.”
• We’re looking at $50 trillion in major burdens, including public debt, public employee pensions and health care, Social Security benefits due to the millions of Baby Boomers who will soon retire, and federal Medicare coverage for the elderly. That’s $440,000 for every household in the United States.
• “We need to be a lot more honest about where we’re at… We need to re-engineer government… We need to get back to basics.”
• “The Baby Boom generation is failing at its stewardship responsibility.”
Oh, and if you think this is all distant Washington noise, think again. Forty percent of state budgets come from federal coffers.
“If you think this ‘Fiscal Wake Up’ stuff is about faraway Washington, D.C., with no relevance to Michigan, YOU NEED TO WAKE UP!” MSU economist Charley Ballard told a packed crowd at the MSU Union at the December 7 event for the nationwide Fiscal Wake Up Tour. “Michigan’s policies have been distressingly consistent with the short-sighted policies at the federal level.”
Walker, Ballard and other economists and finance experts spoke to a packed house at MSU. But we could find very little media coverage of the event. Most major media outlets instead seemed preoccupied with that other topic so absolutely vital to both national security and the prosperity of future generations of Americans – the search for the next football coach at the University of Michigan.
So, with the newspapers on the sidelines, here’s a woeful attempt to fill some of the information gap…
The experts agreed the following steps are absolutely crucial to putting America back on sound financial footing and preventing today’s young workers from taking on unsustainable debt loads to pay for the entitlements of previous generations:
• The public needs to understand the problem and brace for tough choices between massive tax increases (of up to 50 percent by some estimates) or massive cuts in government (nearly everything but defense, by some estimates).
• The sooner we get on with these tough choices, the less costly it will be.
• Bipartisanship will be essential.
• Entitlement System Reform is essential. Benefits must be targeted to the needy (Can we afford for Bill Gates and other wealthy Americans to continue to receive Social Security and Medicare?) Programs and services will undoubtedly be cut.
Brian Riedl, a fellow at the Heritage Foundation, also offered this brief but incisive breakdown of how Washington spends your tax dollars. This year, Washington will spend $24,106 per household. Here’s how:
• $8,301 for Social Security/Medicare
• $4,951 for Defense
• $3,550 for Anti-Poverty programs
• $2,071 for Interest on the Federal Debt
• $907 for Federal Employee Retirement Benefits
• $664 for Health Research & Regulation
• $627 for Veterans’ Benefits
• $584 for Education
• $418 for Highways/Mass Transit
• $392 for Justice Administration
• $305 for Natural Resources/Environment
• $304 for International Affairs
• $299 for Unemployment Benefits
• $282 for Community and Regional Development (things like FEMA and Hurricane Katrina relief)
• $451 for all other things, including farm subsidies, space exploration, air transportation, and energy.
The most uplifting message out of the dire themes of the Fiscal Wakeup Tour is working nonpartisanship/bipartisanship. This nationwide effort is a joint production of three public interest groups, the Heritage Foundation, the Concord Coalition, and the Brookings Institution all of which are in much different places on the left-right political measuring stick.