U.S. Heading For Financial Trouble?

Comptroller Says Medicare Program Endangers Financial Stability

(CBS)  This segment was originally broadcast on March 4, 2007. It was updated on July 8, 2007.

When the stock market soars or plunges, everyone pays attention. But short term results aren't that important to the man you're about to meet. David Walker thinks the biggest economic peril facing the nation is being ignored, and for nearly two years now he has been traveling the country like an Old Testament prophet, urging people to wake up before its too late. Who is David Walker and why should we care?

As correspondent Steve Kroft first reported earlier this year, he is the nation's top accountant, the comptroller general of the United States. He's totaled up our government's income, liabilities, and future obligations and concluded that our current standard of living is unsustainable unless some drastic action is taken. And he's not alone. It's been called the "dirty little secret everyone in Washington knows" – a set of financial truths so inconvenient that most elected officials don't even want to talk about them, which is exactly why David Walker does.

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"I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility," Walker tells Kroft.

David Walker is a prudent man and a highly respected public official. As comptroller general of the United States he runs he Government Accountability Office, the GAO, which audits the government's books and serves as the investigative arm of the U.S. Congress. He has more than 3,000 employees, a budget of a half a billion dollars, and a message he considers urgent.

"I'm going to show you some numbers…they’re all big and they’re all bad," he says.

So bad, that Walker has given up on elected officials and taken his message directly to taxpayers and opinion makers, hoping to shape the debate in the next presidential election.

"You know the American people, I tell you, they are absolutely starved for two things: the truth, and leadership," Walker says.

He calls it a fiscal wake up tour, and he is telling civic groups, university forums and newspaper editorial boards that the U.S. has spent, promised, and borrowed itself into such a deep hole it will be unable to climb out if it doesn’t act now. As Walker sees it, the survival of the republic is at stake.

"What’s going on right now is we’re spending more money than we make…we’re charging it to credit card…and expecting our grandchildren to pay for it. And that’s absolutely outrageous," he told the editorial board of the Seattle Post Intelligencer.

You have heard this before, from Ross Perot 15 years ago. You might have even thought the problem had been solved, when President Clinton announced, "Tonight, I come before you to announce that the federal deficit … will be simply zero."

"Well, those days are gone. We've gone from surpluses to huge deficits and our long range situation is much worse," Walker says.

"President Bush would argue that the economy is in pretty good shape, unemployment is down, the deficit is actually less than expected," Kroft remarks.

"The fact is, is that we don't face an immediate crisis. And, so people say, 'What's the problem?' The answer is, we suffer from a fiscal cancer. It is growing within us. And if we do not treat it, it could have catastrophic consequences for our country," Walker replies.

The cancer, Walker says, are massive entitlement programs we can no longer afford, exacerbated by a demographic glitch that began more than 60 years ago, a dramatic spike in the fertility rate called the "baby boom."

[roach9703]

With the trade deficit over 6% of G.D.P. and all these pension promises we cannotkeep, don't we look like Argentina in the 1990s? Just think, we could be under U.N. / I.M.F supervision. Now how much fun is that?

[xfredmenzies]

Another hack job by CBS, the network that makes millions of dollars by showing ads for prescription drugs. Medicare is bankrupting the government? How about this Iraq War?

[macusweil]

With the GOP spending our tax money under Bush like Tax and Spend Liberals of lore only with out the tax part to pay for it!!

It's only a matter of time before the collection agencies start calling. (You know our dear friends in China and Saudi Arabia who like us so much it hurts!!)

Soon foreign investors will soon control our ports and own our roads too. All our manufacturing will have been exported so we can pretty much resign ourselves to being a debtor nation subservient to rich overseas interests.

[Syndicate]

The amount of money in the US is mind boggling. Think about all those brand new $300,000+ houses they just finished building. Think about all those older americans who bought their houses for $20,000 40 years ago. Watch the freeway for a couple minutes and place a value on each car and big rig that passes you. how long does it take you to get to a million dollars? I know we have about a 6 trillion dollar debt and we have huge trade deficits but what is the value of everything in america? 100 Trillion? 200 trillion? A quadrillion? And who do we buy medical care from anyway? The Indians? The Chineese? NO. We buy it from ourselfs. So like so many things anything spent on healthcare has a multiplier effect through the economy. You pay the doctor who then spends his money that pays someone else and so forth with the goverment collecting a little everytime the money changes hands. By 2040 health care will be so cheap you won't need insurance. They say human knowlege doubles every two years. So by 2040 we should be 2 to the 16 th power (about 65,000) smarter.

[random_radar]

America isn't going to declare bankruptcy. All the government has to do is issue more money to pay its bills. Of course, creating more money dilutes the value of existing money. That means the value of everyone's investments diminishes.

So the bottom line is that the government can pay for everything by devaluating the currency and robbing you of your savings and investment. Since most of the wealth is owned by the older generation that has been around to accumulate it, that means old folks will actually finance their own benefits by losing all their equity to inflation.

So what goes around, comes around. The government will take care of the baby boomers by robbing them of everything they worked all their lives to accumulate. The younger generation that has to care for them will be paid with the elderly's assets indirectly. It all works out in the end.

Don't worry. Get old. Be happy. Die in poverty. It's the American way.

[seachurn]

Don't worry. Get old. Be happy. Die in poverty. It's the American way.
Posted by random_radar at 05:47 PM : Mar 01, 2007

That was perfect.

[bm6005]

AS usual we Americans try to band-aid the problem. To fix this issue we need to do root cause analysis. The root cause is the simple fact that the costs keep rising. We need to understand all of the elements and mitigate all of them. #1 on my list is the ridiculous costs and settlements of insurance and lawsuits. Everyone looks at a mistake in the hospital as going for the gold ring on the merry go round. I see people suing doctors and hospitals because their 93 year old relative dies. What's up with that? Are we supposed to live forever. People complain about deaths in hospitals. Do people go to a hospital because they feel good? No, they go because there's something wrong with them! #2 is the cost of prescription meds. Most meds are made from ingredients costing pennies but costing hundreds of dollars per month. I recently switched to Costco and pay less than my copay used to be. I bought more meds for price break but still paid half on one meds co-pay. Duh?? There's a lot more but hopefully you catch the drift here.

[bm6005]

Oh yeah, I forgot....Impeach Bush!!!

[rhs648]

"So what goes around, comes around. The government will take care of the baby boomers by robbing them of everything they worked all their lives to accumulate."

Some of us baby boomers feel that government has been robbing us all along. High taxes deprive us from saving enough to provide for our own comfortable retirements. The many thousands of dollars that I pay each year in federal, state and local income taxes, property taxes, sales taxes, and other fees could provide me with a very comfortable retirement and something to leave to future generations. Anything I receive from social security shrinks next to what I might have had if only I were allowed to save and invest the money goverment collects from me each year.

[sharncedar]

20 trillion over 75 years, that's much, much less than the defense budget which buys us exactly nothing. There is no Soviet Union, there is no nation that is threatening invasion of the United States. The defense budget is a complete waste, but health care spending keeps American citizens alive instead of dead.

What kind of a crazy country is this. What kind of lunatics complain about health apending while paying 30 times more money for a war machine that does nothing, unless you count losing a war in stupid mode every ten years.

[duffyn]

I suspect that the large settlements aren't the problem. I sure would like to see the profit and loss statments of the health insurance companys. I have a hunch those companies are making a fortune. God, just imagine how much money is taken in - as most of us do pay. There is a huge percentage of us that never even make a claim!

[duffyn]

Oh yeah. And the costs of the war machine. That has taken on a whole new life of it's own. All those bombs and missiles we explode have to be replaced!

[terrapin78]

As if the war in Iraq doesn't cause the Treasury to be bankrupt!

Let's stop fighting wars of choice and spend taxpayers money more wisely.

[nlm2383]

And this is supposed to be shocking news???

[r9119111]

We are already bankrupt, not only as a nation but as a society of individuals who spend money irresponsibly. Foolish policies and irresponsible politicians are catering to private self-interest and individuals are living well beyond their means. Relality will set in very soon and all of the King's horses and all of the King's men won't be able to stop it. Hold onto your hat, my friends we're in for a ride.

GLAC

[drinuk]

Until governments worldwide stop jumping into bed with the Pharmaceutical Companies this problem will not go away. They have had a very unhealthy liason with the FDA and politicians for far too long, which should be sorted out Now!
Furthermore, they cure very little, comfort and dependency are their success, there 'aint no profit in a cure. Whilst they peddle dangerous junk at inflated prices, they lobby government to Ban cheap natural, unpatentable cures, throwing those who promote healthy alternatives into jail. The cost to the nation of their incestuous relationship with crooked officials is quite beyond calculation. Stop It Now !

[drinuk]

Cont. One simply as to consider the manner in which they, Big Pharma, have turned Cancer into a very profitable industry. Chemo as stated in official figures as a success rate of less than 10% and at roughly a thousand dollars a shot, is a great earner. Almost all of the medical profession dance to their tune, most of them brainwashed and scared to speak their minds. Research insititutes sing their song rather than loose funding and so called eminent people act as thier mouthpiece. This unholy cartel are doing more harm to the world than are all the terrorists put together and they are supported by the very people we employ to defend us. The Politicians and Civil Servants.

[beacheshuman]

I refute the assertion that baby boomers is the problem. Baby boomers through all of their productive years have been paying their dues. But because of rampant litigation, and pure corporate greed, abeitted by the political structure that Big Pharm, Big Med, and Big Insurance have built for themselves, those dues have become unbearable. The latest and greatest designer niche pill that prolongs quantity, but not quality of life at an exhorbitant cost is nothing but a cash cow.

[granolaboy1]

My doctor just prescribed me some cholesterol lowering medication. Yes, I have high cholesterol, but my heart scan shows a 0 calcium count. You know what? It is all a giant conspiracy. These drug companies give kickbacks to the doctors if they prescribe anything at all, just to get me hooked on some pill for the rest of my life that the tax payers will have to foot the bill for when I retire.

You know what? I'm not going to fill that prescription, I'll just eat right and get a workout in once a week or so. That way, people who actually need medication, like diabetics, might have something.

[frankinaz]

Not mentioned is that 11 million illegal immigrants have sneaked into this country since the 1986 Immigration "Reform." There are neither controls over their numbers of arrivals, nor any type of checks for diseases or other health issues they bring here. The cost of their healthcare will further drain the system.

[rharrin1]

Put another republican in the oval office and this country will be bankrupt before the end of his/her term.

The policy of tax and spend is the real cause.

How many households can go 20/30 thousand dollars deeper in debt year after year.

The people in Washington need to pay down on the debt and balance the budget.

Approximately half the taxes the government receives goes to paying interest on the debt!!!!!!!

[actornaught]

seventy-freakin'-five-years? who says things will stay the same? and why the heck do we blame this really lame program?

THE CORE ISSUE IS EXAGGERATED HEALTH CARE COSTS and the Big Pharmas, not 'baby-boomers' or 'promises' or 'liberals'!!

Our government is selling all of us out, especially the pseudo-conservatives (you've been so had).

and how can anybody POSSIBLY blame CBS for what this government wack job is reporting??

Wake UP..............

[noview1]

rharrin1.

You're right, the spending what you don't have goes from the personal level to the highest. Individuals have to pay down their credit cards, people have to be less materialist, and our economy can slow down the spiral.

[rharrin1]

noview1

My bills are paid, the gov. has to limit the spending. As in my house DON'T SPEND MORE THAN YOU MAKE

[actornaught]

noview, my credit cards could be paid off with one less toilet seat for the Iraqi police. consumer misjudgement has nothing to do with the Washington money-grab.

[rochest]

raise the cap on Social Security taxes from 90,000 to $140,000 problems solved we could even re use the cap higher and secure longer solvency for Social Security now the drug benefits is a whole different issue for the government we should be negotiating prices down not allowing large pharmaceutical companies to charge Americans higher prices than the rest of the world.

[deranged4]

I hate to be the one to say it but the Bible says"Man is not capable of directing his own footsteps" Boy did he know what he was talking about. Deranged 4.

[sharncedar]

The UK spends the second most money per year on defense spending in the world, about $60 billion. The US spends the most, about $470 billion.

What do we get for that money? Are we "safer" than the UK? The UK is even fighting the same wars as us, and losing just as stupidly, with $410 billion to spare. Probably they spend it on actually improving their economy, and the health and safety of their workers which leads to greater productivity.

We look like idiots, we really do. We spend more money on absolutely nothing, actually harmful and negative thing like the war in Iraq, than most nation's entire government budget.

When will the insanity stop. Great thinkers of the past have warned us about the danger of a "standing army", which soon occupies and oppresses the host country. History is full of the lessons. I guess we're bad history students. So, yes, we will be bankrupt, and with a $470 billion army pointing guns in our faces all the while.

[bigsk8fan]

Health care costs are NOT the problem. We need another Democrat in the White House. All Bush brings is BIG defense and WAR costs. Clinton was able to balance the budget and pay for all the health care. Heck, this war in Iraq doesn't even enhance our security or get back at a country or group that attacked the USA. It merely is Bush's war to get a place in history. Well, I think Bush's legacy will be clear to the future as it is to present American and World citizens.

[terrapin78]

It's the war in Iraq and Republican give aways that are bankrupting the US.

[olgreyghost]

Let's see...if we cancel all the wars (since we started them it shouldn't be that hard), if we cancel all the entitlements that no one is entitled to, and if we let people have more control and responsibility over their lives, particularly in the financial aspect, then we might survive this. But who am my kidding? The U.S. government has become a giant "Pyramid Scheme" and when it collapses there will be a few big winners and a lot of big losers...

[terrapin78]

And the Bushies want to cut taxes more! The rich need to pay their fair share.

[hypnotoad72]

How come illegal immigrants are often targeted by the same folks who seem to have nothing to say about offshoring if not supportive of it? (Not that I am for illegal immigrants, I am not and I am for immigration control in general.) Meh, oh well.

And if all the taxes go to paying back the debt, why more tax cuts - which have proven to have done very little to help the majority of Americans or America's own situation? Rescind the tax cuts; they will make China happier and the stocks will go back up and the US will regain some of its lost credibility. President Bush's approval rate would undoubtedly go up if he were to acknowledge this as well. I'll admit I'm naive, how will rescinding the tax cuts hurt anybody?

Everybody talks of sacrifice, but that means ALL of us. Even the top 1%. What can you do, what can I do, what can they do? Well, let's do our part to the best of our abilities. Nobody's going to stop spending anytime soon, especially if we have jobs that can afford us to spend - which is what the national economy (which is tied to the global economy) is about. Surely?

[hypnotoad72]

BTW: Since the media likes to report problems, how about some solutions as well? Otherwise it's vain fearmongering. Why not take the money from fearmongering and put it toward the debt? The revenue from the media must be much larger than all the box office receipts for all the chapters of the "Friday the 13th" movie series combined! Maybe that's a dim idea and I can think of vastly better and more equitable solutions, but at least it's a suggestion - which takes more guts than what most reporters would even begin to fathom. Especially if I am wrong, which I will readily admit.

[r9119111]

Are we setting a good example for future generations?

I'll continue praying for those who voted for the problems we are facing today. All I can say is, "It's not my fault."

Honest and hard working Americans are being worked over by the same corporate forces that are giving it to the rest of the world. Are we having fun yet?

GLAC

[trivera426]

Never is there any mention of the fact that no solution exists because the politicians have "a different" medical and retirement that is NOT Medicare or Social Security. Let's make EVERYONE on the same plane and then you'll see action!

With their future on the line they'll have a lot more at stake.

[wiredwilly]

If the Republicans need $50,000,000,000,000.00 for Iraq, no problem with the economy. If they need to keep up care for the sick and elderly, that will ruin the Country. There are no words for my disgust at these vile Reptillians crawling around in Washington.

[tuckerndfw]

David Walker has been repeatedly saying that the government needed to increase revenue and decrease expenses to avoid bankruptcy since before Bush took office.

So, what did Repubs do once they gained control? Raised expexnses and decreased revenue.

The US is going to become a third world nation if Americans do not wake up and demand taxes be sharply increased while curbing expenses & tax breaks for people who do not need them, such as Bill Gates & Warren Buffett, and big oil (et al big corp's).

The US is going to need a "foundation" to pay our bills in the next 20 years unless we can legalize enough immigrants to make up the shortfall.

[dogband]

Another BUSH BLUNDER, via the good ole republicans. What a suprise. Where the heck was this news story when this legislation was being considered?

[montraville]

So many ailments are lifestyle ailments, ie overweight, high cholesterol, blood pressure, etc. We should bring back gym class in the schools, and recess, so kids get in the habit of more exercise. Also home economics, so kids know how to cook nutritious meals. Instead we pile on test preparation...

[r9119111]

Mr. Walker, Medicare isn't the problem. The Iraq war is the problem.

[dwordinger]

Those who criticize the President and his Republican followers in Congress are quite justified in doing so, but don%u2019t pretend the Democrats are any better. I don%u2019t remember them opposing this expansion of the Medicare program. Now they have both houses of congress and rather than confront this issue, they waste time on non-binding resolutions. There may others, but the only congressman I know of who has been consistently opposed to this bankruptcy of our nation is Republican Congressman and presidential contender, Ron Paul.

[imigma]

What a disgrace that Congress and the President would allow an already financially crippled entitlement system to become more crippled. The medicare drug program was nothing more than a big windfall for the drug companies. Not surprising, considering that congress and the executive branch have racked up a record national debt at the benefit of private industry (ie Haliburton and Enron). This is one administration that has made things worse than when it came into office, and worse for those that follow. Now, we're left to take care of a giant mess created by greed.

[nosokomos-2009]

Iraq war is not the problem. The problem is that the citizens have figured out how to vote themselves benefits from the public trough. Medical science will never run out of "new" ways to extend and improve live. Even if the don't provide an extension or improvement that comes close to justifying their cost. Citizens will ask "How can you put a price on a human life?" Politicians will pander. We're all going to die. Quit pretending that we can offer late in life benefits that cost more than an individual produced in his lifetime. Life the good life. When your time comes, pass gracefully out of the picture and make room for the next generation. Don't enslave them to your chronic medications and end of life medical heroics. I'm 63 and don't want your prescription benefits or end of life heroics. Why? I have kids and grandkids. Maybe if I'd been childless I could see things differently.

rhg

[erheault]

Why worry, the goverment printing presses are humming along just pumping out money, Need a fer more trillions of dollars? Just put the preses into hiperdrive and vola: it is there, A few trillion here and a few trillion there and all is well.
Being a child of the depression you ARE NOT GOING TO ENJOY WHAT IS IN STORE FOR OUR NATION.

[dallison7]

But then you get into the dilemma of government interference in a free-market economy, so you are stuck. Unless you want to become a socialist estate. Raise your hand if you want to become a socialist estate.
Posted by InMyOpinion

The federal government spends $30 billion a year supporting biomedical research. Those are tax dollars!

The New York Times had an excellent story this week about how drug and medical supply companies make large contributions to charitable foundations run by physicians. To the casual observer, these contributions look like kickbacks, given in exchange for doctors writing prescriptions for their products and also publishing favorable research findings.

[moosbrth]

Another "What is right with my Country!"

[Terry Mauro]

Why don't you point the finger where it really belongs, at the pharmaceutical and insurance companies, who are viewing the retiring baby-boomers as precisely the cash cow they've been waiting for. If any so-called "baby-boomer" is mistakenly under the impression that there'll be anything left over for them as far as Medicare is concerned, they're sadly mistaken. About all you'll be able to count on is being left to die on a stretcher in the hallway of some County Medical Center. If you accept the choices you're left with after the age of 60, even after your hours are cut to under 32/week to avoid full-time employment status, thus relegating you ineligible for medical coverage. And, maybe if you resign yourself to the fact that you'll have to continue working well into your 70's or 80's, in order to survive. Then, maybe the lack, or disappearance of what was once considered to be a "security net" in your old age won't come as such a calamitous surprise when you finally discover it no longer pertains to you, or to your generation. This is the legacy we have to look forward to. Good luck, folks.

[diddee]

Republicans this,Democrats that. Poo!! Vote for who you think will do the best job and stop voting for the 'party'. Fix social security? Will NOT happen until EVERYONE has to depend on it. Oh yeah, Mr or Ms Republican or Democrat politician,from this day forward the tax payers will not pay for your retirement. Ooooh, watch 'em get it fixed now!
Don't you wish that could happen?

[wizest]

There is no problem! If you don't believe that
Talk to the AARP, The gave all the answers to congress. Didn't you watch all the ads with all those pensioners listening to all the lies. ask them again' if you want