It’s time to change nation’s fiscal course

Marketplace Staff Jul 10, 2006

KAI RYSSDAL: The Secretary of the Treasury’s the guy who has to count all the money the government’s bringing in. And we’ve officially got a new one today. Henry Paulson raised his right hand and made a few remarks.

HENRY PAULSON: If we retreat from the global stage, the void is likely to be filled by those who do not share our commitment to economic reform. Instead, we must work to expand trade and investment, work to reform and modernize international financial markets, and be vigilant in identifying and managing potential financial vulnerability.

The words of Henry Paulson this morning, right after the former chief of Goldman Sachs was sworn in as the 74th secretary of the Treasury. Paulson will have a lot to take care of in his new job. Commentator and Comptroller General of the United States David Walker has some advice for him. And for his boss.

DAVID WALKER: People have widely varying views of the Bush Administration’s economic record.

And that’s because it’s very easy to pick facts to support the polar opposite opinions that you often hear.

For example, if you’re “near-sighted,” the Bush Administration’s record looks good. After all, the economy is growing at a healthy pace, the core inflation rate is moderate, and overall interest rates are reasonable in historical terms.

But, if you’re “far-sighted” and concerned about our fiscal stewardship, it looks terrible.

The nation has gone from significant surpluses to huge deficits. Our nation’s “bottom line” has turned bright red due to the “double whammy” of rapid spending increases and significant tax cuts.

Worse yet, over the past several years the nation’s tab has more than doubled to over $400,000 per household.

That tab is for our nation’s debt and unfunded promises for things like Social Security and Medicare, including the new prescription drug bill.

So far, the Administration has been saying, “Stay the course.” If we do, it’s only a matter of time before our ship of state hits the rocks.

No one really knows how much longer foreign central banks and other investors will be willing to finance our excess consumption.

If they cut back on investment in our debt, interest rates are likely to head up, and that’s bad news for all of us.

To avoid this, we need meaningful budget controls on both the spending and tax sides of the ledger.

We need a capable, credible and truly bipartisan entitlement and tax reform commission.

And we need to increase transparency in our federal government’s financial reporting, budgeting and legislative processes.

The poster child that makes the case for this is the Medicare prescription drug bill. Its $8 trillion price tag was never disclosed or debated before the bill became law.

For the sake of our country, our children and our grandchildren, the President’s new economic team needs to change past policies and approaches. And the Congress needs to get more serious about our fiscal situation, too.

Otherwise, our short-term economic gain will likely be followed by significant long-term economic pain.

RYSSDAL: David Walker is the comptroller general of the United States. That makes him the head of the Government Accountability Office.

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