10/14/2007

America's Future....Will it be the next Rome?

This is a sobering article from David Walker, the Comptroller General of the United States. If we're not careful as a nation, our fate will be the same as Rome.
It is a scary thought. Our leaders seem to be asleep at the wheel...Our "decider-in-chief" is just interested in gathering power and not thinking about the day after...

Here is the article, courtesy of the Financial Times. The article appeared in the August 22, 2007 edition of the FT editorial page and is available at http://www.ft.com.


The US is a great nation, possibly the greatest of all time. Yet to keep America great, policymakers must learn certain lessons from history, notably the downfall of the Roman republic.

The world has changed dramatically in recent years. The US is currently the sole superpower on earth but that exclusive status is likely to be short-lived. While the US is number one in many things, from the size of its economy to military might, it faces several big sustainability challenges.

America's fiscal, healthcare, education, energy, environment, immigration and Iraq policies are in need of review and revision. Timely action is needed because Washington's historical crisis-management approach to dealing with hard public policy choices is no longer prudent.

From a fiscal perspective, a few vital statistics underline the problems. First, while short-term federal deficits are coming down, they are still too high given the impending retirement of the "baby boomers" and the fact that the cost of the global war on terrorism accounts for just a fraction of US operating deficits. In fiscal 2006 the war cost was about $100bn compared with a total operating deficit of about $434bn.

Second, the nation's total liabilities and unfunded commitments for pension and health programmes for the elderly (Social Security and Medicare, respectively) have mushroomed from about $20,000bn to about $50,000bn in the six-year period ending in fiscal 2006, driven largely by the passage of the Medicare prescription drug benefit and the failure to impose planned Medicare cost controls.

Furthermore, many believe that the assumptions for long-term health cost increases used to calculate these Medicare numbers are too optimistic. Despite these sobering facts, some members of Congress are trying covertly to eliminate the current provision designed to control Medicare spending as part of unrelated legislation pending in Congress. When will common sense come to Washington?

The US has faced big challenges in the past and it has always risen to them. However, we must not take comfort in our nation's current superpower status and past success. For a lessonin what we should avoid, we must learn from history. In this regard, the Roman republic fell for a number of reasons and three in particular resonate today.

First, there has been a decline in moral values and political civility at home. Examples include the devaluation of life, greater self-centredness by individuals and increased partisanship and ideological divides in Congress.

Second, we now have an overextended military around the world. While the US military is unmatched as to its capabilities, it is under stress and stretched very thin.

Last, there is fiscal irresponsibility by the central government. Our debt ratios are set to increase dramatically when the baby boomers retire.

What type of actions are needed?

First, the next president should make the issue of "fiscal responsibility and intergenerational equity" one of his/her top priorities. This includes reformingSocial Security, healthcare and our tax systems. Tax reform should aim to improve the simplicity, credibility and equity of the system.

It is also vital that a few courageous and credible champions emerge in both houses of Congress and from both parties to work with the new president to make long-overdue reforms happen.

While it is highly unlikely that big reforms will occur during the balance of the Bush administration, some meaningful progress can and should be made before January 2009. Elected officials should work to pass tough budget controls to help slow our fiscal bleeding. They should also work with the Government Accountability Office to enhance transparency regarding our longer-range fiscal challenges, targeting current financial reporting practices and budgeting processes. Last, they should create a capable, credible and bipartisan commission to set the stage for significant reforms in 2009.

These actions would enhance our chances for meaningful reform. They would also improve respect for and confidence in elected officials, whose approval levels hover near historical lows. As George Washington once said, we should avoid "ungenerously throwing upon posterity the burdens that we ourselves ought to bear". US elected officials should heed these words, learn from history and start making tough choices to ensure that the US is the first republic to stand the test of time.

The writer is comptroller general of the United States and head of the USGovernment Accountability Office
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