In a speech before the National Press Club on December 17, 2007, Comptroller General of the United States, David M. Walker spoke about the federal governments "total liabilities and unfunded commitments" which have now reached $53 trillion, up from $20 trillion in 2000. On the 18th, my local paper had a brief article about the speech and a few of the dozen or so blogs I regularly read also had comments. On the 19th, the issue disappeared both from the MSM and the blogosphere. Occasionally one of the candidates for president will talk about the need for the US to reduce its’ $9 trillion debt but none of them, to my knowledge, have publicly spoken about the issue of the $53 trillion of unfunded commitments put forth by Mr. Walker. So I decided to spend some time with a look at the various candidates’ web sites to see who, if any, of the candidates were addressing either the $9 trillion or $53 trillion dollar figures or, what prescriptions each candidate would propose. Below the fold I will address these issues in more detail and also provide information and direct quotes from each web site.
First, some highlights from Mr. Walkers’ speech:
Candidly, our current deficit and debt levels are not unduly troubling as a percentage of our national economy. However, these deficit levels and related debt burdens are set to escalate dramatically in the near future due to the retirement of the "baby boomers" and rising health care costs. The fact is, absent meaningful reforms, America faces escalating deficit levels and debt burdens that could swamp our ship of state!
Snip
This brings me to the longer-range picture. Believe it or not, the federal government’s total liabilities and unfunded commitments for future benefits payments promised under the current Social Security and Medicare programs are now estimated at $53 trillion, in current dollar terms, up from about $20 trillion in 2000.
Snip
...the American people have little trust or confidence in the federal government’s ability to address serious issues in a timely and constructive manner. Second, most Americans don’t have a high opinion of the executive or the legislative branch, or of either major political party. Third, they are starved for two things, truth and leadership. It’s time they got more of both.
For a link to the speech, see
http://www.gao.gov/...
Having read the full text of the speech, I decided to see what "truth and leadership" our presidential candidates are providing.
Note: of the estimated $53 trillion shortfall, approximately $34 trillion of that is from Medicare alone. And of that $34 trillion, an estimated $6-8 trillion is from the newly enacted Medicare Part D Drug Benefit plan.
The following information is from a separate GAO speech by Mr. Walker at Michigan State University, December 6, 2007, entitled: U.S. Financial Condition and Fiscal Future Briefing/Saving Our Future Requires Tough Choices Today.
Under the sub-heading: Growth in Spending for Social Security, Medicare, and Medicaid Expected to Outpace Economic Growth.
Anticipated Spending Growth in Constant dollars, 2007-2032:
GDP: 71%;
Social Security Spending: 127%;
Medicaid Spending: 224%;
Medicare Spending: 235%.
The "Status Quo" is Not an Option:
* We face large and growing structural deficits largely due to known demographic trends and rising health care costs.
* GAO’s simulations show that balancing the budget in 2040 could require actions as large as:
- Cutting total federal spending by 60 percent or;
- Raising federal taxes to 2 times today's level.
Note: is there anyone who thinks either of those last two bullet points will ever happen?
Faster Economic Growth Can Help, but It Cannot Solve the Problem:
* Closing the current long-term fiscal gap based on reasonable assumptions would require real average annual economic growth in the double digit range every year for the next 75 years.
* During the 1990s, the economy grew at an average 3.2 percent per year.
* As a result, we cannot simply grow our way out of this problem. Tough choices will be required.
For a link to the second speech quoted, see http://www.gao.gov/...
The GOA report then talks about some of those ‘tough choices’ but I found them to be mostly generalities and will not include them here.
After a thorough review of each candidate’s web site, I decided to provide grades based on the time honored method many of us grew up with in school, from F to A. A grade of F means the candidates’ web site did not address either the $9 trillion debt or the $53 trillion in unfunded commitments (and, obviously, provided no prescription to either issue). A grade of D means that the candidates’ web site addressed one of the two issues but did not provide a prescription to address the issue. A grade of C means that the candidates’ web site addressed one of the two issues and provided a prescription to address the issue (no matter how good or bad the prescription). A grade of B means that the candidates’ web site addressed both issues but did not provide any prescriptions. A grade of A means that the candidates’ web site addressed both issues and provided prescription(s), (no matter how good or bad the prescription). On each web site, I searched under multiple ‘Issues’ headings, under attached speeches and also clicked on numerous links to find what information the candidates thought important. Searches were made under, but not limited to: Fiscal, Social Security, Healthcare, Medicare, Entitlements, Government Spending, and Deficit. Not all web sites had all of these options available but I did as thorough a search of each site as I could. All information from all web sites is current as of January 20, 2008.
As I grade the candidates, I will also provide quotes and other information from their web sites addressing the issue(s), and if any, their prescriptions.
Note: I did not view the web site of Mike Gravel due to his low poll numbers. Duncan Hunter has dropped out. Also, if anyone finds anything on any site that I have missed, please feel free to include that information in comments, or provide links.
Grade F
Hillary Clinton, John Edwards, Rudy Giuliani, Dennis Kucinich
Note: I expected Giuliani to receive an F, but Clinton, Edwards and Kucinich both surprised and disappointed me.
Grade D
Mitt Romney
Searching under the Issue ‘Reform Entitlements’ we find the following:"In a forthright and bipartisan manner, as President, Governor Romney will work with Congress to address the looming budget crisis caused by increasing entitlement spending."
Note: this is so meaningless; I’m making his grade D-.
Mike Huckabee
Searching under the Issue ‘Taxes/Economy, we find the following: "I believe that our massive deficit is not due to Americans' being under-taxed, but due to the federal government's over-spending. Achieving and maintaining a balanced federal budget is an important and worthy goal necessary to our long-term economic well-being. To achieve a balanced federal budget, I believe the President should have the line-item veto."
Grade C
Barack Obama
Searching under the Issue ‘Medicare’ we find the following: "Obama is committed to the long-term strength of the Medicare program. He will reduce waste in the Medicare system, including eliminating subsidies to the private insurance Medicare Advantage program, and tackle fundamental health care reform to improve the quality and efficiency of our healthcare system. Obama supports closing the "doughnut hole" in the Medicare Part D prescription drug program."
Note: closing the "doughnut hole" will increase the estimated $6-8 trillion unfunded commitment for Medicare Part D so, sorry Barack, make it a C-.
Fred Thompson (I found Thompson’s grade a bit of a surprise)
Searching under the Issue ‘Federal Budget and Spending/Budgetary Reform’ we find the following: "In a few short years—not a generation from now—a fiscal tsunami that could imperil our security and economic prosperity will hit our nation and place an unfair burden of debt on our children and grandchildren. The tens of trillions of dollars in debt that will be accumulated over the next few decades will do immense harm to our economy. This burden is now estimated at $170,000 per person and $440,000 per family. Time is running out to address this looming crisis. We need market-based approaches to reform that guarantee benefits for those who need them and embrace personal responsibility and cost-effectiveness without raising taxes. Given the scope and urgency of this problem, and the burden it will place on our children, reform is not only an economic necessity, it is a moral imperative that requires action now. I am committed to:
Opening the government’s fiscal books on this looming crisis for all to see and understand.
Working with individuals of all political persuasions to develop a comprehensive solution to the pending fiscal crisis.
Leading and making the hard choices necessary, to include cutting wasteful government spending, to safeguard our security, promote our prosperity, and protect our children and grandchildren from fiscal calamity.
Note: those figures of $170,000 per person and $440,000 per family are quoted directly from the second GAO report noted above.
Note: I should probably increase Thompson’s grade to B as he does, although not with any detail, address both issues. But for now, I will leave him with a C+ because he does not really provide any substantive prescriptions, just generalities about market based approaches.
Grade B
None
Grade A (I predicted Paul would get an A, I also predicted his prescription. McCain surprised me).
John McCain
Searching under the Issues ‘Social Security’ and ‘Medicare’ we find the following:
Reform Social Security: John McCain will fight to save the future of Social Security and believes that we may meet our obligations to the retirees of today and the future without raising taxes. John McCain supports supplementing the current Social Security system with personal accounts -- but not as a substitute for addressing benefit promises that cannot be kept. John McCain will reach across the aisle, but if the Democrats do not act, he will. No problem is in more need of honesty than the looming financial challenges of entitlement programs. Americans have the right to know the truth and John McCain will not leave office without fixing the problems that threatens our future prosperity and power.
Control Medicare Growth: The growth of spending on Medicare threatens our fiscal future. John McCain has proposed comprehensive health care reforms that will reduce the growth in Medicare spending, protect seniors against rising Medicare premium payments, and preserve the advancements in medical science central to providing quality care.
Controlling health care costs will take fundamental change - nothing short of a complete reform of the culture of our health system and the way we pay for it will suffice. Reforms to federal policy and programs should focus on enhancing quality while controlling costs:
Promises made to previous and current generations have placed the United States on an unsustainable budget pathway. Unchecked, Social Security, Medicaid and Medicare obligations will grow as large as the entire federal budget is now in just a few decades. Without comprehensive bipartisan reform to America's entitlement programs, the nation will be unable to meet the challenges of providing vital medical and social security assistance to future generations.
Note: McCain’s prescriptions for achieving the above goals are too lengthy to include here so I will summarize: End pork barrel spending; Make tough choices; Lower taxes; Reduce spending. His issues talking points are detailed however his prescriptions are the usual small government right wing talking points, so, A-.
Ron Paul
Note: Paul does not generally include ‘Issues’ points, rather he tends to quote from his speeches. As such, I have copied and pasted relevant sections.
But today, too many politicians and lobbyists are spending America into ruin. We are nine trillion dollars in debt as a nation. Our mounting government debt endangers the financial future of our children and grandchildren. If we don’t cut spending now, higher taxes and economic disaster will be in their future — and yours.
When it comes to Social Security and Medicare, the federal government simply won't be able to keep its promises in the future. That is the reality every American should get used to, despite the grand promises of Washington reformers. Our entitlement system can't be reformed - it's too late. And the Medicare prescription drug bill is the final nail in the coffin.
The Medicare "trust fund" is already badly in the red, and the only solution will be a dramatic increase in payroll taxes for younger workers. The National Taxpayers Union reports that Medicare will consume nearly 40% of the nation’s GDP after several decades because of the new drug benefit. That’s not 40% of federal revenues, or 40% of federal spending, but rather 40% of the nation’s entire private sector output!
The official national debt figure, now approaching $9 trillion, reflects only what the federal government owes in current debts on money already borrowed. It does not reflect what the federal government has promised to pay millions of Americans in entitlement benefits down the road. Those future obligations put our real debt figure at roughly fifty trillion dollars- a staggering sum that is about as large as the total household net worth of the entire United States. Your share of this fifty trillion amounts to about $175,000.
Don’t believe for a second that we can grow our way out of the problem through a prosperous economy that yields higher future tax revenues. If present trends continue, by 2040 the entire federal budget will be consumed by Social Security and Medicare alone. The only options for balancing the budget would be cutting total federal spending by about 60%, or doubling federal taxes. To close the long-term entitlement gap, the U.S. economy would have to grow by double digits every year for the next 75 years.
The Social Security crisis is a spending crisis. The program could be saved tomorrow if Congress simply would stop spending so much money, apply even 10% of the bloated federal budget to a real trust fund, and begin saving your contributions to earn simple interest. That this simple approach seems impossible speaks volumes about the inability of Congress to cut spending no matter what the circumstances.
Paul’s prescription is pure Ron Paul: "The answer to these critical financial realities is simple, but not easy: We must rethink the very role of government in our society." Italics mine.
Note: In other words ladies and gentlemen, you’re on your own. There’s a ‘Going Out of Business’ sign on Washington DC. Will the last one out please turn off the lights?
And to close, a personal note. After spending many hours on the various candidates’ web sites, and just for fun, I’m grading the best and worst sites: Best: McCain (substantive, detailed and he addresses more issues than any other site). Worst (tie): Clinton (fewest issues and least substantive), Giuliani (videos on every issues page so very slow to load). Of course, this is just IMHO.