'I.O.U.S.A.': Tackling the national debt

A former U.S. comptroller wants to scare America straight about its ballooning national debt.

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Interview by Marlys Harris, Money Magazine editor-at-large

'I.O.U.S.A.' follows former U.S. Comptroller David Walker across the country as he argues that the nation needs to rein in its spendthrift ways.
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(Money Magazine) -- Al Gore put global warming into the family dinner conversation; now David Walker, former U.S. Comptroller and the star of "I.O.U.S.A.," a documentary about our ballooning national debt, says that if we don't face up to our fiscal problems, the U.S. could go broke.

Among his possible solutions: reforming the tax system and reducing health-care spending.

Question: Just how bad are things?

Answer: Even worse than advertised. Everyone talks about this year's deficit, which is $455 billion. And the national debt, the accumulation of all our past deficits over the years, recently passed $10 trillion.

But the real problem is the nearly $41 trillion in unfunded promises and off-balance-sheet obligations.

Q. What are those?

A. Specifically, $7 trillion attributable to Social Security and $34 trillion for Medicare.

Q. But we had a surplus a few years ago. What happened?

A. In 2002, Congress failed to extend the budget controls that were in place in the '90s that helped take us from deficit to surplus.

Since then, Washington has been totally out of control. We have unfinanced war costs, a new Medicare prescription drug benefit, unfinanced tax cuts and now the bailouts.

Q. But sometimes you have to go into debt, right?

A. Individuals do that, and when they pass away, the debts go with them.

But government debts stay, and they have to be assumed by our children and grandchildren. That's not only fiscally irresponsible; it's morally reprehensible.

Q. How can we lower the debt?

A. Younger people and those who are middle or upper income will see a reduction in their Social Security benefits. We also need to encourage people to work longer.

And we have to reform health care. Even countries that have socialized medicine limit what they'll spend. There could be universal coverage for basic care.

Those who want heroic measures will be on their own. We are also going to need more revenue - taxes. Over time, I think we're going to see an income tax with fewer deductions and tax preferences, but that keeps rates low.

Q. All that doesn't sound like it will be politically popular.

A. True. That's why I support the creation of a bipartisan fiscal future commission that would make a range of budget, entitlement, spending and tax reform recommendations to the next President and Congress for an up-or-down vote.

We need to do the right thing for America's future, and that means enduring some degree of shared sacrifice today.

A wake-up letter to Washington

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