David Walker, U.S. comptroller general and chief of the Government Accountability Office, is demanding accountability again. I recently wrote on my blog about his Fiscal Wake Up Tour, in which he and experts on both sides of the political spectrum came to Baltimore to implore the country to wake up and restore fiscal sanity.
Last week, just in time for the U.S. national debt odometer to click past $9 trillion, GAO issued its annual audit of U.S. accounts, which contains more of the same message. It's worth repeating. And repeating and repeating. Because huge federal liabilities will cause huge taxes down the road, this affects the wallet of every American and future American.
Auditors such as the GAO or PricewaterhouseCoopers are paid to come in, comb through the books and make sure everything is recorded accurately and presented fairly. But they have another job, which is to sound alarms when the books show that the health of the enterprise is in danger.
In the private sector this is called the "going concern" section, and an auditor's finding that a business may not have the wherewithal to be a going concern is very serious. Indeed, it is an implicit warning of bankruptcy.
Here is what we might consider the "going concern" section of GAO's audit:
"Our nation's real challenge is not short-term deficits, rather, it's the U.S. government's impending longer-term structural deficits and related fiscal burdens. Indeed, what we call the longer-term fiscal challenge is not in the distant future. The first baby boomers become eligible for early retirement under Social Security on Jan. 1, 2008 - only two months from now - and for Medicare benefits just 3 years later. ...
"Simply put, our nation is on an imprudent and unsustainable long-term fiscal path that is getting worse with the passage of time. Absent significant changes on the spending and/or revenue sides of the budget, these long-term deficits will encumber a growing share of federal resources and test the capacity of current and future generations to afford both today's and tomorrow's commitments. ...
"Given the size of the projected imbalance, the U.S. government will not be able to grow its way out of this problem; tough choices will be required."
You wouldn't buy stock in a company like that.