Comptroller General David Walker

Excerpts from a Monitor breakfast on the cost of war in Iraq, Medicare's prescription drugs, and whether deficits really matter.

David Walker has been Comptroller General since 1998. Prior to that, he was a partner at Arthur Andersen and global managing director of the firm's human capital services practice. While at Andersen, he was a public trustee for Social Security and Medicare from 1990 to 1995. Before joining Andersen, he was Assistant Secretary of Labor for Pension and Welfare Benefit Programs and served as Acting Executive Director of the Pension Benefit Guarantee Corporation.

Here are excerpts from his remarks at Thursday's breakfast:

On tracking the cost of war in Iraq:

"The Defense Department has a challenged financial management system....It takes months to get department-wide data and when you get [it], there are billions in the so-called miscellaneous category. And of the things we are doing in Iraq right now is we are trying to get a sense of [the spending] - allegedly we are spending $1.1 billion a week. It is hard for me to see how we are spending $1.1 billion a week, so we are trying to get a better feel for how we are spending $1.1 billion a week and if so, on what."

On a new book quoting Vice President Cheney as saying budget deficits don't matter:

"I don't know what he was talking about. I can only speculate that he was talking more from a political standpoint than an economic and policy standpoint because Vice President Cheney is obviously a very bright person, he's got a lot of experience, and I am sure that he knows that they do matter from an economic and policy standpoint."

On the US growing its way out of budget deficits:

"Our fiscal gap is too great to grow our way out of this problem. Tough choices are going to be required. We are going to have to make tough choices in three areas. Number one: reform entitlement programs. Number two: look at the base of discretionary spending which has not been fundamentally reviewed, reexamined, and reprioritized in decades. And also look at tax policy. We are going to have to look at all three. ...the gap is simply too great to grow your way out of. Based on reasonable assumptions, it would require double-digit real GDP (gross domestic product) growth for decades to grow your way out of this problem. That is not going to happen. It is time we recognize reality and start making tough choices."

On the real cost of the new Medicare prescription drug benefit:

"The number everybody talked about was $395 billion. That is the estimated negative cash flow or cost for 10 years which is what CBO (Congressional Budget Office) is required to do. ...some of the assumptions that they are told to use are not realistic. One of which is just looking at 10 years. If you look at the next 10-year period, CBO is on record as saying it is $1-to-$2 trillion....the final numbers are not in yet but I have heard estimates as high as $8 trillion for that one bill on a discounted present value basis (over a 75 year period). That is more then the accumulated deficits since the beginning of the Republic."

On places where savings can be found:

"In my view, the federal government is an amalgamation of...policies, programs, functions, and activities over several decades which made sense when they were enacted...but which over the decades have never been subject to a fundamental review, re-assessment, re-engineering, re-prioritization. And as I look at the annual budget and appropriations debates, to a great extent there is almost a presumption that the base is OK and the fact of the matter is the base is not OK and the base is not sustainable....One of the things that has to happen, and we are going to play a role in this regard, GAO, we need to fundamentally re-examine the base of government, help Congress do that...

There are a number of areas out there that cry out - for example, infrastructure. The federal government has huge excess infrastructure, it is not just in the Defense Department it is also at the Postal Service, the VA (Veterans Administration), and many civilian agencies....(another example is) disability programs. The definition of disability in the United States today to a great extent is based on the 40s and 50s. It is based on a work force of the 40s and 50s, medical technology of the 40s and 50s, life spans of the 40s and 50s."

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