Dangers of growing national debt aired at Bryant

CREDIT DUE: David Walker is participating in “I.O.U.S.A.” as part of a “wake up call” campaign by the Peterson Foundation. /
CREDIT DUE: David Walker is participating in “I.O.U.S.A.” as part of a “wake up call” campaign by the Peterson Foundation. /

First there was Al Gore and the “The Inconvenient Truth.” Now there is David M. Walker and “I.O.U.S.A.”
Walker, the former U.S. comptroller general, brought warnings of an impending catastrophe to an economic summit at Bryant University on Aug. 29, insisting that the public needs to push the nation’s leaders into taking action to reverse America’s burgeoning $9 trillion national debt.
“Too many people are focused on today and are mortgaging tomorrow,” Walker told a gathering of about 230 business leaders who attended the event sponsored by Bryant’s John H. Chafee Center for International Business. “You need to learn that it’s time to stop digging. You need to have a plan to get out of it.”
By his calculation, the country is already in a $53 trillion financial hole when factoring in unfunded promises for Social Security and Medicare – a number that grows by $2 trillion to $3 trillion annually even if there is a balanced budget. That works out to about $175,000 of public debt per each American, $455,000 per household.
Americans have “an additional mortgage which they probably don’t know about,” Walker said. “But unlike the normal mortgage, there’s no house to back this one.”
In much the same way Al Gore appeared in the documentary “The Inconvenient Truth” to outline the repercussions of global warming, Walker plays a leading role in “I.O.U.S.A.,” a documentary in limited release nationwide about the dangers of the country’s debt problems. Like Gore’s effort, this film also has Oscar hopes.
At Bryant, Walker said a 30-minute version of the documentary will be released on the Web at the end of October. And filmmakers recently signed a deal with a national TV network to air it in January.
It is all part of a “wakeup call” campaign by the Peterson Foundation, a nonprofit launched earlier this year by Peter G. Peterson, founder of the world’s largest buyout firm, Blackstone Group LP. With a $1 billion fund, the foundation intends to address America’s most critical environmental, economic and social problems.
Walker resigned as comptroller in February to become the foundation’s president and CEO.
He told the gathering at Bryant that there’s no doubt the country is headed for big financial trouble, a downward spiral that picked up speed in 2002 when statutory budget controls expired. Since then, there has been “out of control spending, unfunded wars, tax cuts and government bailouts,” Walker said. “And we ain’t seen nothing yet.”
To finance the debt, the United States is borrowing from countries such as China and Japan and OPEC nations – to the point where foreign lenders hold about half America’s public debt.
“That’s not good from an economic standpoint,” Walker said. “It’s not good from a foreign policy standpoint, and over time, it may not be good from a national security standpoint.”
Part of the problem: If foreign powers decided to restrict their lending in the midst of America’s “tsunami of spending” – as Walker called it — interest rates would rise, bringing its own set of financial difficulties.
Many Americans themselves are in similar trouble, with saving rates at all-time lows. “Americans are great at spending but most Americans are not good at saving,” he said. “Too many are following the bad example of our government.”
The situation hasn’t risen to crisis levels yet, Walker said, but it soon will.
“We’ve got to have a president who’s willing to take on these issues, and who is focused on the future and doing what’s right rather than holding their own political position,” he said.
“We also have to make the political price associated with doing nothing greater than the political price of doing something,” he added. “And only the people can do that.”
Walker said he would like to see a bipartisan committee assembled to make recommendations to the president on several issues, including reforms of Social Security, health care and taxes.
State and local governments aren’t immune, either.
Walker said many local communities are feeling more than a financial pinch from budget items such as growing Medicaid costs. But because most are required to pass a balanced budget, that’s causing other problems, like unfunded retiree health care plans, under-funded pension plans and the deferred maintenance of infrastructure.
“Only the federal government can pass on its debt to the next generation,” he said.
In the end, Walker said he is optimistic that the debt trends can be reversed, once the public demands action from its leaders. And he acknowledged that it is not as daunting a problem as global warming because there’s no need for the cooperation of many nations.
“We [Americans] created this problem; we can solve this problem,” Walker said. “We just need to get on with it.” &#8226

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