The nation's comptroller general told more than 75 local business leaders Friday that America faces a fiscal crisis unless it makes fundamental changes in tax policy and entitlement spending.
"There is no way we're going to grow our way out of this problem," said David Walker, who runs the Government Accountability Office and has been preaching the perils of deficit spending for several years.
Walker came to Cincinnati as part of a "Fiscal Wake-Up Tour," in which panelists from the Heritage Foundation, Brookings Institution and Concord Coalition explain how future generations will be hamstrung by debt the U.S. government is incurring today.
The event was sponsored by the Business Courier and was held at the Bankers Club downtown. Cincinnati is the 20th city to host the wake-up tour.
Because of demographic changes, rising health care costs and a reluctance by political leaders to cut back on Social Security, Medicare and Medicaid entitlements, the GAO projects that government spending will rise from 20 percent of the nation's gross domestic product to 50 percent by 2040, Walker told the group.
Such a shift would either force dramatically higher taxes or require massive cuts in basic government services. In fact, GAO projections show no money available for anything beyond interest payments, Social Security, Medicare and Medicaid.
Panelists discussed a variety of options that could address the problem, including an increase in the retirement age to encourage healthy Americans to work longer; an overhaul of the nation's tax system; forcing Congress to re-impose procedural restraints on deficit spending; implementing an income-tiered system for providing Medicare coverage and repealing new prescription drug benefits added to the Medicare program last year.
Walker said the only way the problem will be solved is if citizens force politicians to make tough choices.
"The most powerful words in the Constitution need to come alive. Those are the first three words, 'We the people,'" Walker said.
After the event, Walker said the tour is having an impact, with the White House Budget Office now paying more attention to long-term fiscal matters and Congress weighing the formation of a 16-member nonpartisan commission to draft legislation addressing the matter.
Sen. George Voinovich, R-Ohio, who delivered videotaped remarks to the group from Washington, D.C., touted his proposal for the SAFE Commission, a bipartisan panel that would be asked to draft legislation for long-term deficit reduction.
Voinovich and Rep. Frank Wolf, R-Va., introduced legislation last year for SAFE, or Securing America's Future Economy. The measure failed to pass but was recently re-introduced.
Voinovich said the measure would establish a 16-member panel of experts and lawmakers to draft "actual legislation" for addressing long-term deficit concerns. It would also include a "fast-track" provision, requiring Congress to vote on the legislation or draft an alternative.
"America's fiscal situation is dire," Voinovich said. "We are using our children's and grandchildren's credit cards for today's needs."
Busken Bakery founder Joe Busken was sold on the need for fundamental change in U.S. fiscal policy. Busken said a 50 cent per-gallon gasoline tax might be one idea worth exploring, as would the establishment of a "means test" for benefits to seniors. He said wealthy individuals should not pay the same rates as low-income seniors for health coverage,
Busken sees no reason why the government charges just $100 a month for his Medicare coverage.
"There's no way in the world you can buy health insurance for $1,200 a year," he said.