The State of our Finances

One of the most basic functions of government, at any level, is to demonstrate financial responsibility, being good stewards of tax dollars.

The Controller General of the United States does not seem to think our Federal Government is handling our money in a very responsible way.

David M. Walker, the nation's chief accountability officer and head of the U.S. Government Accountability Office, or Controller General gave his opinion to Congress at 10 a.m., Tuesday, January 23, 2007.

He summed it up quite neatly by stating the following:

• Our current financial condition is worse than is widely understood.
• Our current fiscal path is both imprudent and unsustainable.
• Improvements in information and processes are needed and can help.
• Meeting our long-term fiscal challenge will require (1) significant entitlement reform to change the path of those programs; (2) reprioritizing, restructuring and constraining other spending programs; and (3) more revenues—hopefully through a reformed tax system. This will take bipartisan cooperation and compromise.
• The time to act to save our future is now!

He continued to explain:

A great deal of budget reporting focuses on a single number—the unified budget deficit, which was $248 billion in fiscal year 2006. This largely cash-based number represents the difference between revenues and outlays for the government as a whole. It is an important measure since it is indicative of the government’s draw on today’s credit markets—and its claim on today’s economy.

And:

To understand the long-term implications of our current path requires more than a single year’s snapshot. In this regard, the long-term outlook has worsened significantly in the last several years. That is why for more than a decade GAO has been running simulations to tell this longer-term story.

Then, he says:

Our long-range imbalance is growing daily due to continuing deficits, known demographic trends, rising health care costs, and compounding interest expense.

And:

To “grow our way out” of the current long-term fiscal gap would require sustained economic growth far beyond that experienced in U.S. economic history since World War II.
Similarly, those who believe we can solve this problem solely by cutting spending or solely raising taxes are not being realistic. While the appropriate level of revenues will be part of the debate about our fiscal future, making no changes to Social Security, Medicare, Medicaid, and other drivers of the long-term fiscal gap would require ever-increasing tax levels—something that seems both inappropriate and implausible. That is why I have said that substantive reform of Social Security and our major health programs remains critical to recapturing our future fiscal flexibility. I believe we must start now to reform these programs.

Ok, it seems as though most intelligent people in this country understand that, after all, we've been told all this for years now. He really spells it out in his 24 page report to Congress. If you can suffer through all the dead weight of so many budget and finance terms, you can glean a lot of interesting points out of it. I can't help but wonder how watered down it was by various well-meaning individuals before it ever reached Congress, and the public.

Read his full report here.

So where's all the money going?

Sheesh...no wonder some want to transform our economy into a continental one, our own seems to be on the verge of collapse.