Dennis Cook, Associated Press
St. Anthony: 'Rock star' watchdog weighs in on U.S. budget
- Article by: NEAL ST. ANTHONY
- Star Tribune
- September 26, 2011 - 11:23 AM
David Walker is as close to a rock star as any former comptroller general of the United States is going to get.
The onetime CPA packs town halls with his message of fiscal responsibility that should shame borrow-and-spend conservatives of the past decade and liberals who don't grasp that the country cannot afford all the Medicare, Medicaid and Social Security promises made to baby boomers and beyond.
Walker, who stepped down in 2008 as the government's chief budget watchdog, has become a favorite on financial channels and on public television. He's speaking Tuesday to the St. Paul Area Chamber of Commerce.
"Walker cuts through politics," said James McClean, the chamber's public affairs director. "We hope that Tuesday's discussion will result in concrete proposals that the business community can unite behind, push forward to our legislators, and make true progress toward the fiscal stability required for economic success."
Business is not without some duplicity in the budget mess. At the state and federal level, business lobbies have screamed mostly at Democrats about high state and federal corporate taxes, at the same time that many of them have successfully employed legions of lobbyists to win industry-specific and even company-specific tax exemptions, deductions, credits and allowances that have made their effective tax rates far lower.
Similarly, the big money in America is made not on wages but on capital gains. The long-term federal rate is at a generations-low 15 percent. And even millionaire hedge fund traders have been able to fight off attempts to tax speculative profits at the higher personal rate.
Billionaire investor Warren Buffett notes that he pays a lower tax rate than his secretaries.
"Warren is right in that we're going to need more revenues ... [to balance the federal budget]," Walker said in an interview last week. "He's also right that we have an equity issue in that there's a growing gap between the 'haves' and 'have-nots.' Some of the wealthiest pay a lot lower effective rate than the middle income.
"We go about our solutions differently. We need to get more people paying income taxes. And about 50 percent don't pay anything. We also need to increase the effective rate, about 18.8 percent for the top 1 percent, even though the nominal top rate is 35 percent.''
Walker thinks a better way to achieve tax reform is one that "broadens the tax base, eliminates many deductions, credits and exclusions ... and eliminates the differential between labor and capital."
"It should be simpler," he said. "It also has a chance to get more bipartisan support. The Republicans are not going to raise marginal tax rates. That is political suicide. But not all tax cuts stimulate the economy and not all of them pay for themselves. And businesses have gotten a lot of back-door tax breaks, subsidies and exclusions that benefited them but not the overall economy."
Walker, a political independent who traditionally leaned Republican, has 35 years in accounting, business and public service. And he's right about compromise and shared sacrifice. We're in a deep debt hole, which now amounts to about $46,300 per American. It started getting serious a decade ago when the president and Congress cut taxes and then launched wars in Afghanistan and Iraq. Then came the recession of 2008-09 and the aftermath of a weak recovery.
The deficit in the federal fiscal year that ends this month is expected to be about $1.5 trillion, driving the overall federal debt to more than $15 trillion. President Obama has offered to cut the deficit by up to $4 trillion over the next decade. The Republicans don't like his proposals. Game on in Washington.
Walker, who now ranks the United States 28th among countries on his "Fiscal Responsibility Index," has proposed a "Restoring Fiscal Sanity" plan as part of his grass-roots "Comeback America Initiative."
Walker takes on the big three spending pots: defense, Medicare and Social Security, the latter two welfare programs that are not means-tested. He also calls for increasing the Social Security benefit for the neediest, gradually delaying retirement for those under 55. And increasing the taxable wage base to $150,000.
Walker, who noted that the federal deficit was last balanced in 2000 when Bill Clinton was president, is as tired as anybody of the patriots who want everybody else's program cut except theirs. For starters, Walker would:
•Limit what the federal government can spend annually on health care and move away from our provider-enriching fee-for-service payment systems in Medicare and Medicaid, and adopt treatment standards based on sound clinical evidence of what works, including sensible end-of-life care. It's stunning that we pay up to twice what other industrial nations that have universal health care do but get no better or worse outcomes or longer lives.
•Simplify the tax system, as President Ronald Reagan and a Democratic Congress did in 1986; broaden the tax base by cutting preferences; consider lower nominal rates on corporations, and consider an individual consumption tax to inspire savings and investment.
•Require the Pentagon to integrate planning and budget processes for the various services, putting together a common schedule of weapons and other needs along with funding priorities designed to address credible threats in an affordable and sustainable manner. Defense spending has nearly doubled over the past decade.
Walker's plan would balance the federal operating budget (less interest) by 2015 and cut the long-term debt significantly over the next decade and beyond. More information about the Comeback America Initiative: www.tcaii.org.
Neal St. Anthony • 612-673-7144 • firstname.lastname@example.org
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