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Entries in U.S. Comptroller General (2)

Thursday
Mar082012

Former Comptroller General Warns of Greek Scenario in US

iStockphoto/Thinkstock(NEW YORK) -- Former U.S. Comptroller David Walker has warned that the U.S. could slide into a debt scenario similar to what Greece is experiencing.

“The truth is if you count total U.S. government debt as compared to many of the European nations that are in the news, we’re already worse than they are, and we’re two years away from where Greece was when it had its crisis,” Walker said in a recent interview with CYInterview.com.

But he said that the size and economic power of the U.S. means it would have more time to right itself before disaster.

Walker served as U.S. comptroller general from 1998-2008, heading the Government Accountability Office under Presidents Bill Clinton and George W. Bush.

He’s been warning of fiscal troubles since 2007, when he told CBS’s Steve Kroft in a 60 Minutes segment, “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.”

In this election year, Walker’s current message is simple: A broken political process is driving the U.S. toward fiscal ruin.

Walker is pushing to “shake up” that system, serving on the leadership board of Americans Elect, the group that aims to put an Internet-nominated presidential candidate on the November ballot in every U.S. state. The group told ABC News in an editorial meeting last month that it would almost certainly achieve that goal.

The former federal auditor said he wanted to see a repeat of Ross Perot’s independent 1992 presidential run.

“We don’t get enough specificity with regard to what people are proposing to do in order to make sure the type of debt crises that are occurring in Europe won’t reach our shores,” Walker told CYInterview’s Chris Yandek and Jay Bildstein.

“We’ve got more time than those countries in Europe, because of who we are and what our position is in the world, but we don’t have unlimited time, and it’s really important that this year’s presidential campaign place a lot of attention on the issue of fiscal responsibility and sustainability as Ross Perot did 20 years ago with significant positive impact,” Walker said.

Copyright 2012 ABC News Radio

Thursday
Jul072011

Former US Comptroller General: Who's Going to Get Paid?

Comstock Images/Thinkstock(WASHINGTON) -- Treasury Secretary Tim Geithner said that missing the Aug. 2 deadline to raise the debt ceiling would result in catastrophic economic and market consequences.

But Republican leaders are doubtful such Armageddon-like consequences will come to light. On ABC’s Top Line, GOP lawmakers have repeatedly dismissed the deadline, saying they are “not afraid” of it, as Rep. Allen West, R-Fla., put it. Or in the words of Rep. Jim Jordan, R-Ohio, “it’s not like the world ends on August 2nd.”

In a literal sense, Jordan is right, it is unlikely the world will cease to exist if Republican and Democratic lawmakers fail to come to an agreement. But what exactly will happen if Congress fails to pass a budget amendment in time for that early August deadline?

The answer: a $4 billion-a-day gap in revenues coming in and expenditures going out, according to former U.S. Comptroller General David Walker. And that includes weekends.

Indeed, the United States is already in the hole when you run the revenue-minus-expenditures equation.

“Our revenues are so low this year, and our mandatory spending is so high, we're $2 billion bucks a week short of being able to pay mandatory spending,” said Walker, a shortfall that comes after eliminating all discretionary spending. Walker is also the founder and CEO of the Comeback America Initiative.

“National defense, homeland security, education, transportation, state department, congress, the White House -- you could eliminate all of that. We're still $2 billion a week short.”

But back to what would happen post August-2nd. The United States Constitution protects bond holders, said Walker, so interest trade payments on those bonds must be paid. And then there’s the pay penalties of interest for all government employees laid off in the event of a government shutdown. Historically the president and congress retroactively paid people once the crisis passed. But such a move could affect interest rates.

“For every one percent increase of interest rates -- 100 basis points -- it’s $150 billion bucks a year,” said Walker. “That's real money.”

Like Geithner and several economists have warned, Walker says it is a bad idea to flirt with the deadline, and wait until the last minute to broker a deal. There is no precedence for failing to raise the debt ceiling, but Walker pointed to a similar debt scenario in the 1970s, when the U.S. did not pay $100-$200 million worth of its payments on time during the oil crisis. The late payment pushed interest rates up 60 basis points, or 0.601 percent, said Walker.  

This time around, should the U.S. be late on its payments again, it would likely affect the stock market as well as interest rates. The government, says Walker, needs to get a deal in place before that deadline.

“Look, we're the largest economy on Earth, the world's sole super power, 60 percent plus of global reserve currency, we cannot afford to take a risk.”

Copyright 2011 ABC News Radio







ABC News Radio