This is the accessible text file for CG speech number GAO-07-417CG 
entitled 'America in 2017: Making Tough Choices Today Can Help Save Our 
Future' which was released on January 31, 2007. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

Presentation by the Honorable David M. Walker: 

Comptroller General of the United States: 

America in 2017: Making Tough Choices Today Can Help Save Our Future: 

Speech before the Mendoza School of Business: 
The University of Notre Dame: 
South Bend, Indiana: 
January 26, 2007: 


United States Government Accountability Office: 

Thank you, Jim O'Rourke, for that kind introduction. 

As a public servant, a CPA, and a practicing Roman Catholic, I was 
pleased and honored when the Mendoza School of Business asked me to 
participate in this lecture series. 

Most of us are curious about what the future may look like. Future 
trends are something I've been interested in for a long time. It's also 
a subject that my agency, the U.S. Government Accountability Office 
(GAO) is taking very seriously. In fact, providing Congress with 
foresight into future trends is an increasing part of GAO's work today. 

This morning, I'm going to lay out two very different views of 
America's potential future in 2017. Either can come to pass. The choice 
is up to you, me, and our fellow Americans. If we're willing to learn 
from history, accept some tough choices, and hold our elected 
representatives accountable for acting in our collective and best long- 
term interests, then we can help save our future. We can also build a 
better tomorrow--not just for ourselves but for future generations of 
Americans. But if we continue as we have, America's future is "at 

Americans have long been fascinated by the future. As a nation of 
immigrants, we're focused more on the possibilities ahead of us rather 
than the difficulties our ancestors faced in the Old World. Most of us 
trace our roots to other countries and continents. Our ancestors spoke 
many languages and practiced various religions and social customs. 
We're the most diverse country on earth and a true microcosm of the 
world. What unites us as Americans is our belief in equal opportunity 
and the possibility of a better life through perseverance and hard 
work. Our love of freedom is equaled only by our devotion to faith and 

These values date back to the founding of our republic. You can see it 
in our Constitution, which laid down our system of government. This 
historic, hopeful, and forward-looking document expresses the then- 
radical belief that society works better when men and women are free to 
speak their minds, vote their consciences, and worship as they please. 

Over the years, our nation has continued to build on that foundation. 
We're known for our innovation and openness to new ideas. In fact, 
we've been home to many of the world's greatest scientists and 
inventors, from Ben Franklin to Thomas Edison, from Jonas Salk to Bill 
Gates. We've long had an optimistic and can-do attitude. We've also had 
a tradition in this country of trying to leave things better off for 
those who will follow us. Stated differently, earlier generations 
understood it was important not just to live for the day but to provide 
for a better tomorrow. That's called stewardship. 

But today, our continued ability to pass on a better tomorrow is in 
jeopardy. On the surface, things may seem fine at the moment. After 
all, we have relatively strong economic growth, low unemployment rates, 
moderate inflation rates, and strong capital markets. At present, we're 
also the world's sole superpower, and our overall standard of living 
remains exceptionally high. Compared to most nations, the United States 
ranks very high on measures like personal income, literacy, and home 
ownership, just to name a few. Furthermore, while our system of 
government is sometimes frustrating and dysfunctional, it's still the 
best on earth. Clearly, we Americans have much to be proud of and much 
to be thankful for. 

However, if we continue on our present path, America in 2017 may look 
very different. Several current and emerging trends threaten our 
future. Powerful forces are building silently offshore, not unlike a 
tsunami. While we aren't in any immediate danger, it's time we started 
to prepare for the tidal wave of entitlement spending and other 
challenges that we know are coming. 

Our population is aging and people are living longer. The baby boomers 
are set to start retiring in just one year. Despite increased 
immigration, our workforce growth is slowing. These trends will put 
enormous strains on our retirement systems. Another key trend is 
skyrocketing health care costs. Candidly, if there's one thing that 
could bankrupt America, it's the cost of health care. And despite our 
nation spending huge sums on health care, many Americans remain 
uninsured or receive mediocre care. I'll talk more about this later on. 
Given these and other trends, the federal government faces an 
increasing gap between revenues and expenditures. 

In addition to fiscal policy and health care, we face a range of major 
sustainability challenges in areas like tax policy, Social Security, 
Iraq, immigration, foreign relations, education, energy, and the 
environment. Successfully meeting these challenges will require a new 
type of transformational leadership, especially at the presidential 

Irrespective of these challenges, we're still a great nation, probably 
the greatest in history. But if we want to stay a great nation, we must 
face facts, recognize reality, and heed the lessons of history. Stated 
differently, we must learn from the past in order to help prepare for 
tomorrow. I think there are some important parallels between America's 
current situation and that of another great power from the past: Rome. 
The Roman Empire lasted a thousand years, but only half that time as a 
republic. The Roman Republic fell for many reasons, several of which 
resonate today: Declining moral values and political civility at home, 
an over confident and over extended military deployed around the world, 
and fiscal irresponsibility by the central government. Sound familiar? 
In my view, we should learn from history and take steps to ensure the 
American Republic is the first to stand the test of time. 

From a fiscal perspective, the facts are clear, compelling, and 
undisputed. Unless we make changes, and soon, the United States is 
poised to enter a prolonged period of escalating deficits and rapidly 
mounting debt burdens. What's at stake is nothing less than our future 
economic growth, our future standard of living, and even our future 
domestic tranquillity and national security. 

Our recent lack of fiscal discipline has only made our challenge more 
difficult. Despite a drop in the annual budget deficit in 2006, our 
deficits remain imprudently high. But it's the government's long-term 
finances that are the real problem. Over the last six years alone, our 
nation's total liabilities and unfunded commitments, chiefly for Social 
Security and Medicare, have soared from about $20 trillion to about $50 
trillion. Fifty trillion dollars translates to about $440,000 per 
American household. Keep in mind the median household income in America 
is less than $50,000 a year! They may not know it, but the typical 
American family now owes more than nine times their annual income. 
That's like having a mortgage but no house! While this burden will have 
to be paid off over many years, the amount continues to grow every day 
because of continued deficits, known demographic trends, and 
compounding interest costs. The only asset that some Americans have to 
address this burden is their American citizenship. Fortunately, U.S. 
citizenship gives individuals unparalleled opportunities to earn, 
invest, and reach their full human potential. 

What we've got brewing is a potent--and toxic--mix of ignorance, 
apathy, and inaction throughout our society. Unfortunately, too many 
American leaders and institutions suffer from the dual afflictions of 
myopia and tunnel vision. And too many individual Americans suffer from 
shortsightedness and self-centeredness. Our indifference in many areas, 
including fiscal discipline, cannot continue. If it does, it isn't a 
matter of "if" but "when" a crisis will occur--and how bad it will be. 

2017: Two Scenarios: 

I'm now going to lay out a couple of scenarios for how our country may 
look in 10 years. The first scenario assumes we fail to act and our 
fiscal woes mount. I want to give some credit here to Jim Fallows, who 
wrote a powerful piece in the July 2005 issue of The Atlantic Monthly. 
The title of Fallows' article is "Countdown to Meltdown," and I'd 
recommend it to anyone interested in public policy. The second scenario 
assumes we get serious and make much-needed and long-overdue reforms. 

If we stay on our present path, America is likely to see slower 
economic growth, much higher tax burdens, rising interest rates, 
mounting unemployment, a stagnant or declining standard of living, and 
growing gaps between the haves and have-nots. These developments will 
be evident by 2017, and they will build in intensity in subsequent 

Higher interest rates will put increasing pressure on federal, state, 
and local governments. Consumers will also feel the pinch, especially 
those with significant debts that are interest-rate sensitive. A 
further decline in the value of the dollar is also likely. Overseas 
trips and some foreign goods will be out of reach for many Americans. 
We could even see long gas lines and a resurgence in inflation. 

If we stay on our present path, our budgetary flexibility will be 
increasingly constrained. Social Security's share of the budget will 
begin to rise in 2009, putting pressure on other federal spending. 
Furthermore, unless steps are taken, in about 10 years Medicare Part A 
won't have enough revenue to pay all its hospital bills and Social 
Security will be running a negative cash flow.  

And remember, bad news flows downhill, so don't count on state and 
local governments to take up the slack. They'll be dealing with their 
own financial problems. For example, they're going to be faced with 
spending more on things like pensions, retiree health care, welfare, 
Medicaid, and local law enforcement. Many states have constitutions 
that prohibit deficit spending, so governors and state legislators will 
have no choice but to cut budgets and/or raise taxes. 

As James Fallows noted in his article, if the public starts to lose 
ground economically and lose confidence in their elected officials, 
they may well turn to nontraditional political candidates who don't 
pander and are willing to make tough choices. But as history shows, 
economic instability can also provide an opening for political 
demagogues who offer simplistic, unrealistic, and populist solutions to 
complex problems. 

In the end, I'm convinced our elected representatives will act because 
the failure to do so will eventually become politically unacceptable. 
The real question is how quickly can we convince policymakers to return 
us to a prudent and sustainable fiscal path before a crisis hits? 

On the other side of the coin, if we do address the fiscal and other 
challenges we face, we can avoid many of the negative consequences I've 
just described. Meaningful action will also position us for a more 
positive future. Under this scenario, the America of 2017 would enjoy 
higher economic growth rates, more reasonable tax levels, more targeted 
and sustainable social insurance and other systems, greater confidence 
in government at home, and more respect for America abroad. I don't 
know about you, but I prefer this scenario. 

A Way Forward: 

You're probably wondering what we need do to put us on the path toward 
a more positive future. By nature, I'm an optimist and a person of 
action, so I don't believe in simply stating a problem. I'm now going 
to present some steps we can take to maximize our chances of success. 

In my view, the first order of business should be to state the facts 
and speak the truth to the American people. For starters, Washington 
needs to improve transparency so we can see where we are financially 
and where we're headed fiscally. As the federal official who signs the 
audit report on the government's financial statements, I'm here to tell 
you that our government's finances are worse than advertised. 

For one thing, the federal government has three annual fiscal deficit 
numbers! Depending on which one you use, the federal government's 
annual deficit in fiscal 2006 ranged from $248 billion to $450 billion 
with one time actuarial gains and $617 billion without them. 
Furthermore, contrary to popular belief, most of the federal 
government's budget deficit has nothing to do with the cost of the 
conflicts in Iraq and Afghanistan. The federal government also uses 
terms that don't reflect reality, terms like "trust funds." In fact, 
only the federal government could get away with funding long-term 
obligations like Social Security and Medicare with its own debt and 
call it progress. 

In some ways, our nation's fiscal problems have similarities to cancer. 
Once pain and other advanced symptoms occur, your prognosis is poorer. 
A patient whose cancer has spread has fewer options, and aggressive 
treatment is often required to avoid catastrophic consequences. That's 
why early detection and prevention are so important. It's the same for 
our nation's finances: By acting soon, we can forestall catastrophic 
consequences in the future. We can also reduce the amount of changes 
necessary and have more transition time. 

When we take a long-term view of our nation's finances, it becomes 
clear that we're on an imprudent and unsustainable path. There's no way 
we're going to grow our way out of our long-range fiscal challenges. 
The gap is simply too great and the math doesn't work. 

Waste, fraud, abuse, and mismanagement are a concern in government 
today. Obviously, we should have zero tolerance for the misuse of 
taxpayer dollars. But there's a limit to how much money we're likely to 
recoup in this area. Frankly, eliminating every dime of wasteful 
government spending wouldn't even come close to closing our fiscal gap. 

We've all heard the rhetoric. We'll be just fine if we can just get rid 
of congressional earmarks, foreign aid, or National Aeronautics and 
Space Administration missions back to the moon and on to Mars. Similar 
arguments are being made for eliminating the 2001 and 2003 tax cuts. 
But candidly, these actions don't get the job done. In fact, even 
shutting down the entire Department of Defense, which obviously makes 
no sense, wouldn't come close to closing our fiscal gap. 

Instead, what's needed are more fundamental and systemic reforms, 
including reconsidering what the federal government should do, and how 
it should do business in the 21st century. The truth is that our single 
greatest source of savings will come from bold, decisive efforts to 
transform existing government programs, policies, and operations. 

More broadly, the bulk of federal government spending today is on 
autopilot and based on social, economic, national security, and other 
conditions from before many of the people in this room were born. I'm 
talking about conditions dating back to when Harry Truman, Dwight 
Eisenhower, and Jack Kennedy were in the White House. 

American families regularly clean out their closets and attics. Surplus 
items are either sold at yard sales or donated to worthwhile 
organizations like Catholic Charities or Goodwill Industries. 
Unfortunately, the federal government has never undertaken an 
equivalent spring cleaning in connection with its programs, policies, 
and operations. 

Instead, our government continues to expand, with new federal 
activities and initiatives added to existing programs, policies and 
operations every year. Washington rarely seems to question the wisdom 
of its existing commitments. As President Ronald Reagan once quipped a 
government program is "the nearest thing to eternal life we'll ever see 
on this earth." 

Today, nothing less than a top-to-bottom review of federal programs and 
policies is needed. Congress and the President need to decide which of 
these activities remain priorities, which should be overhauled, and 
which have simply outlived their usefulness. Entitlement reform is 
especially urgent and needs to be a top priority. Based on historical 
tax levels, it's clear that Social Security, Medicare, and Medicaid 
alone are on track to absorb virtually the entire federal budget based 
on historical tax levels if they aren't reformed!  

To help in this reexamination and transformation effort, in 2005 GAO 
published a seminal report called "21st Century Challenges: Reexamining 
the Base of the Federal Government." I'd recommend it to everyone here 
today, and it's free on our Web site at This report asks 
over 200 probing questions about mandatory and discretionary spending, 
tax policies, federal regulations, and government operations. 
Everything is on the table. 

More recently, this past November I sent a letter to the incoming 
leadership of the new Congress suggesting three dozen areas for 
additional oversight. I also urged the development of a set of key 
national indicators to better inform congressional and executive branch 
decision making, and to help the government focus on achieving real 
results for the American people. After all, recent statistics from the 
Organization for Economic Cooperation and Development show the United 
States is below average on a range of key outcome measures for its 30 
member countries. We can and must do better!  

Fortunately, attention and concern on Capitol Hill are increasing. 
Members of Congress on both sides of the aisle have started asking some 
pointed questions about where we are and where we're headed. In 
addition, the Administration now acknowledges that despite some 
progress in bringing down the short-term federal deficit, we have a 
large and growing long-term fiscal imbalance that requires tough 

Beyond increasing transparency, what can we do? First, it's crucial 
that we impose meaningful budget controls on both the tax and spending 
sides of the ledger. These controls need to apply to tax cuts as wells 
as to both discretionary and mandatory spending. We also need more 
transparency and controls over congressional earmarks and emergency 
supplemental spending. 

Members of Congress should also have more explicit information on the 
long-term costs of spending and tax bills--before they vote on them. 
The Medicare prescription drug benefit, which is turning out to be one 
of the most expensive government entitlement programs of all time, is a 
glaring example of what's wrong today. The 2003 legislation came with 
an $8 trillion-plus price tag, but that fact wasn't disclosed or 
discussed until several months after the bill became law. 

We also need to enact meaningful entitlement reforms, reprioritize and 
constrain other federal spending, and engage in comprehensive tax 
reform that will generate additional revenues. We should try to 
minimize tax burdens in order to maximize economic growth, disposable 
income, and our competitive advantage as compared to Europe. At the 
same time, we're going to need enough revenue to pay our current bills 
and deliver on our future promises. 

To get things moving, we may need to create a bipartisan commission to 
take up Social Security, tax, health care, and other needed reforms. 
The commission would be tasked with developing a balanced package of 
proposed changes for consideration by the President and Congress. This 
commission wouldn't need to re-invent the wheel. Rather, it could draw 
on the work of many prior commissions, existing organizations, and 
various individuals. At a minimum, the results of such a group effort 
could facilitate more informed and accountable debate in the 2008 
election cycle. 

This commission could be created statutorily, as was proposed last year 
by Senator George Voinovich and Congressman Frank Wolf. Other members, 
including Senators Pete Dominici and Diane Feinstein, have recently 
announced alternative commission proposals. Such a commission could 
also be formed independent of the political process, perhaps sponsored 
by foundations and composed of a bipartisan group of preeminent players 
whose recommendations couldn't be ignored. The recent efforts of Jim 
Baker and Lee Hamilton on the Iraq Study Group come to mind in this 

Citizen education and engagement are also essential. The American 
people need to become more informed and involved in connection with the 
problems facing our country. They also need to become more vocal in 
demanding change. Younger Americans especially need to get more active 
in this discussion because they and their children will pay the biggest 
price and bear the heaviest burden if today's leaders fail to act. 

The good news is we saw a higher voter turnout among younger Americans 
in November's midterm election. From Iraq to immigration, from ethics 
to fiscal irresponsibility, the public's dissatisfaction with the 
status quo in many areas was abundantly clear. But going forward into 
the 2008 elections, it's essential that the American people and the 
press hold candidates accountable when it comes to fiscal discipline 
and other major sustainability challenges. 

This is why I've been speaking out publicly about our nation's 
worsening financial condition and fiscal outlook both in Washington and 
around the country. Beginning in September 2005, I started going on the 
road with representatives of the Concord Coalition, the Brookings 
Institution, and the Heritage Foundation as part of a "Fiscal Wake-up 
Tour." We've been holding forums and town-hall meetings at colleges and 
universities and other public venues across the country. Sometimes 
we've been joined by governors, mayors, and members of Congress. Most 
recently, we were joined in Columbus, Ohio, by former Senator John 
Glenn and current Office of Management and Budget Director Rob Portman. 
Next month, we'll be in Des Moines, Iowa, and Manchester, New 

At every stop, we've made it a point to lay out the facts in a 
professional and nonpartisan way. We've also stressed the moral and 
ethical dimensions of these challenges, including the unfair 
intergenerational aspect of our current fiscal path. 

During the tour, I've found that the American people today are hungry 
for two things: truth and leadership. The folks on Main Street just 
want some straight talk on what's going on. They also want leaders who 
can help show the way forward, and who can work on a bipartisan and 
multilateral basis to solve public problems. 

And on this score, it doesn't matter whether you're a Democrat, a 
Republican, or an Independent. The problems I've been describing today 
aren't partisan in nature, and the solutions won't be either. We need 
bipartisan proposals that will appeal to the "sensible center," rather 
than to the ideological extremes on both the left and the right. 

Selected Key Policy Challenges: Health Care, Tax Policy, and Social 

Now I'd like to address three major public policy challenges that are 
directly linked to our broader fiscal challenge: health care, tax 
policy, and Social Security. I'll start with our health care system, 
because our success or failure in this area is going to have a huge 
impact on America's overall fiscal future. The rising cost of health 
care isn't just evident in federal and state programs like Medicare and 
Medicaid, it's also a growing burden and competitiveness challenge for 
the private sector. The American people are also being affected in the 
form of coverage gaps, cost-shifting strategies, and concerns about 

Despite repeated efforts to rein in health care spending, costs 
continue to climb. The United States now spends about 16 percent of its 
economy on health care. Our current health care system provides doctors 
and patients with few incentives to be prudent in their treatment 
choices. There's little transparency about the actual value and prices 
of various health care services. Furthermore, at present we have few 
mechanisms to hold plans and providers accountable for delivering 
positive results at a reasonable price. 

Ironically, despite dazzling medical advances in recent decades, the 
U.S. health care system lags behind those of many other countries on 
several basic measures of quality. These include key outcomes like life 
expectancy, infant mortality rates, and medical error rates. An oft- 
cited study by the Institute of Medicine estimates that annual hospital 
deaths caused by medical errors exceed annual deaths caused by car 
accidents, breast cancer, and AIDS. 

Despite our nation's wealth, universal access to even a basic level of 
care remains an elusive goal. We've been wrestling with this challenge 
for nearly a century. In his failed bid for President under the Bull 
Moose Party banner in 1912, Theodore Roosevelt campaigned for national 
health insurance. Harry Truman took up the issue again in the 1940s. 
More recently, President Clinton proposed a major overhaul of our 
health care system. Unfortunately, the problem of uneven access is 
still with us and has been growing worse with the passage of time. 
Today, over 46 million Americans lack health insurance. 

The problems with our health care system are having far-reaching 
effects. Some of these effects are obvious. Others are more subtle. For 
example, the rising cost of government health care programs is fueling 
budget deficits at both the federal and state levels. The individual 
tax base is shrinking because more and more employee compensation is 
coming in the form of nontaxable benefits like health insurance. It's 
also likely that soaring health care premiums are also leading some 
companies to move offshore and to hire part-time or contract workers, 
who aren't offered pension and health benefits. 

In my view, comprehensive health care reform is both essential and 
inevitable. Thanks to our growing fiscal imbalance and the rising 
medical expenses associated with an aging population, the pressure to 
overhaul our medical system will only increase with time. Any serious 
health care overhaul must include a range of federal reviews and 
reconsiderations, including the current tax exclusion for employer- 
provided health insurance. 

Whether we're talking about a Fortune 500 company or a federal program, 
all sectors of our society need to reconsider how they define, deliver, 
and finance medical care. We're going to have to weigh unlimited 
individual wants against overall societal needs, and available public 
resources. We're going to have to make difficult decisions about how 
responsibility for health care should be divided among employers, 
individuals, and government. Individuals are also going to have to 
assume more personal responsibility and accountability for their own 
wellness efforts and health status. 

Given the size of our health care challenge and the complexity of the 
issues and emotions involved, it's likely that comprehensive reform 
will need to occur in installments and be phased in over time. This 
will help to help forge political consensus, minimize disruptions in 
health care delivery, and give people time to adjust to any changes. 
Our health care crisis can be cured. What's needed is a sound 
prescription for progress and some real leadership. 

In the end, we may need to focus on four high-level goals for health 
care reform. First, providing universal access to certain "basic and 
essential" health care services while avoiding taxpayer-funded "heroic" 
measures and giving individuals the option of buying more coverage if 
they so desire. Second, limiting the percentage of the federal budget 
that is dedicated to health care. Third, achieving above average health 
care outcomes for an industrialized nation. Finally, requiring 
individuals to be more responsible and accountable for their personal 
health. More of us need to be taking sensible steps to stay well, 
including getting enough exercise, eating well, not smoking, and 
drinking in moderation. 

Comprehensive health care reform will take time. In the interim we need 
to consider taking several steps. For example, restructuring the 
Medicare prescription drug benefit, pursuing more case management 
techniques for federal programs, allowing some additional 
experimentation by the states, leveraging technology in connection with 
health records, pursuing more cost-effective acquisition strategies, 
and last but possibly most important, pursing the creation of a set of 
national practice standards. Such standards can help to improve 
consistency, enhance quality, control costs, and reduce litigation. The 
sooner we pursue these steps the better. Importantly, the federal 
government can lead by example by adopting these practices for its own 
programs. In some cases, like Veterans Administration's electronic 
medical records, the government already is. 

The second area is our tax system. Our current system is way too 
complex for most Americans to truly understand and voluntarily comply 
with. We have an estimated $345 billion annual gap between what people 
should be paying and what they actually pay. Furthermore, most 
Americans now pay more in payroll taxes than income taxes each year. 

Another problem is the Alternative Minimum Tax (AMT), which was 
intended to only hit the so-called "rich." But as I and many of you 
undoubtedly know firsthand, the AMT is now biting more and more middle 
class Americans. This tax is, in substance, nothing more than a "bait 
and switch surtax." The AMT needs to be retargeted to the very top 
earners, with any revenue loss made up for by broadening the base and/ 
or adjusting the basic rates. 

Ultimately, we need to streamline and simplify our tax system in order 
to stimulate economic growth, encourage voluntary compliance, 
facilitate effective enforcement, and improve the credibility of our 
current system. This includes broadening the tax base to minimize tax 
rates. At the same time, over time we're probably going to have to move 
to some sort of consumption tax to help address our huge health care 

The third and final policy topic is Social Security. We've heard a lot 
of talk about Social Security, and there have been a number of related 
false or misleading statements from both sides of the political aisle. 
The truth is that under today's financing structure, Social Security 
will never go bust. It does, however, face a large and growing 
financing gap that needs to be addressed and soon. 

Reforming Social Security is the easiest part of these three major 
policy challenges. We can and should reform Social Security in a way 
that can make it solvent, secure, and sustainable. I'm confident that 
by acting now, we can exceed the expectations of every generation of 
Americans. Doing so will likely involve little to no changes for 
individuals currently over a specified age--like 55-60. Changes for 
younger workers can be phased in over time. Possible changes that have 
been proposed in the past include higher normal or full retirement 
ages, lower replacement rates for middle-and upper-income individuals, 
a strengthened minimum benefit for low-income individuals, a modified 
cost-of-living index, and possibly a higher taxable wage base. 

In light of our nation's savings deficit, we may also want to consider 
requiring individual savings accounts as a supplement to a reformed, 
defined benefit Social Security program. These accounts could be funded 
by an additional modest payroll tax withholding with the money being 
deposited in a real trust fund. Individuals would have various pooled 
investment options, much like the Thrift Savings Plan that's available 
to federal workers. 

Despite a lower federal deficit last year, the long-term fiscal burden 
continues to worsen. Specifically, the expected burdens for Social 
Security, Medicare, and a range of other federal commitments continue 
to rise. This is our real challenge, and we must begin to deal with it, 
and soon, because time isn't on our side. 

Time doesn't allow me to address the other sustainability challenges 
that I mentioned at the outset of my remarks. I would, however, be 
willing to answer questions on them at the conclusion of my talk. 

America's Leadership Deficit: 

Why haven't we made more progress on these key sustainability 
challenges to date? In part because one of our biggest problems today 
is that we have a serious leadership deficit at all levels of 
government and across all sectors of society. Whether the subject is 
fiscal policy, health care, taxes, Social Security reform, or 
government transformation, it's going to take dedicated men and women 
who are willing to face the facts, work together, and make a number of 
tough choices that are in our collective best interests for both today 
and tomorrow. 

In my view, these leaders will need five key attributes: courage, 
integrity, creativity, a willingness to partner, and a commitment to 
stewardship. We're going to need leaders with the courage to state the 
facts, speak the truth, and do the right thing, even when it isn't easy 
or popular. We're going to need leaders who have the integrity to lead 
by example and practice what they preach. Leaders who recognize that 
the law represents only the floor of acceptable behavior and who strive 
to meet a higher moral and ethical standard. We're going to need 
leaders who are creative, who can see new ways to address old problems, 
and who can help others see the way forward. Leaders who can reach 
across institutional lines, political aisles, and geopolitical borders 
and partner for progress with their counterparts in government, private 
industry, and the nonprofit sector, both domestically and 
internationally. Finally, we're going to need leaders who take their 
stewardship responsibilities seriously. True leaders strive to leave 
things not just better off but better positioned for the future when 
they leave their jobs and this earth. As I mentioned earlier, this has 
been a long tradition in America, and it's one that we should continue. 

A Call to Service: 

Many of you here this morning are students at Notre Dame. I know this 
university was founded on the belief that serving others is among 
life's greatest callings. I hope each of you will seriously consider 
public service as a way to make a difference--for your country, your 
community, your church, and your family. I think you'll find public 
service will also make a difference in you. 

As someone who has divided his career between government and the 
private sector, I can tell you that my experience at federal agencies 
has been challenging, enlightening, and rewarding. Before coming to GAO 
in 1998, I was a senior executive in several private sector firms, 
including Arthur Andersen before its fall. I also served as a trustee 
of Social Security and Medicare, as Assistant Secretary of Labor, and 
as head of the Pension Benefit Guaranty Corporation. My public sector 
experience has given me a chance to help many people, some of whom I've 
gotten to know, others whom I'll never have a chance to meet. 

Opting for public service is an honorable choice. Public service is a 
chance to make people's lives better and their futures brighter. Public 
service is a calling where individuals and organizations can help build 
a better nation and a better world. 

As you contemplate your future, please consider giving at least two 
years of your life in a job or role that provides service to others. 
This could be done through the military or civilian government service, 
in faith-based or other charitable organizations, or in community and 
other public interest groups. Lots of jobs in various sectors, from 
nursing to teaching to social work, provide wonderful opportunities to 
serve others. 

One person clearly can make a difference in today's world. My favorite 
president, Theodore Roosevelt, is proof of that. TR, as he's often 
called, was someone with character, conscience, and conviction. In 
fact, TR is the only American to have won both the Congressional Medal 
of Honor and the Nobel Peace Prize. 

TR firmly believed that it was every American's responsibility to be 
active in our civic life. Democracy is hard work but it's work worth 
doing. And that's really at the heart of my message tonight. How 
America looks in 2017 is, in great measure, up to us. After all, in our 
republic, "we the people" are ultimately responsible and accountable 
for what does or does not happen in Washington. 

Please don't misunderstand my message this morning. Like most 
Americans, I'm an optimist by nature, and things are far from hopeless. 
Yes, it's going to take some tough choices on a range of important 
issues. But anything is possible in America, and a few thoughtful 
reforms phased in over time can do a lot to put us on a prudent path. 
It's also essential that all of us understand the need to make some 
modest sacrifices today to help ensure a better tomorrow. 

The real difficulty is convincing elected officials and the public that 
the time to act is now. If we wait until a crisis hits, we'll have few 
options, and they'll be far harsher and more disruptive. 

Other countries have addressed similar challenges, including Australia 
and New Zealand. Like the United States, they have aging populations. 
Unlike the United States, these two countries have stepped up to the 
plate and dealt with some of their serious long-term challenges. Among 
other steps, they've reformed their overburdened public pension and 
health care systems. The efforts by policymakers in Australia and New 
Zealand show it's politically possible to make difficult decisions that 
require short-term pain in the interest of long-term gain. 

In the case of the United States, effective leadership--the kind that 
leads to meaningful and lasting change--has to be bipartisan and broad- 
based. Leadership can't just come from Capitol Hill or the White House. 
Leadership also needs to come from Main Street. It's time for the three 
most powerful words in our Constitution--"We the people"--to come 
alive. As I said earlier, the American people are going to have to 
become better informed and involved as we head toward the 2008 
elections. And the next President, whoever he or she may be, and 
whichever party he or she represents, should be prepared to use the 
bully pulpit of the Oval Office to push needed reforms. If these things 
happen, we have a real chance to turn things around and to help ensure 
that we will be better off and better positioned for the future in 2017 
than we are today. 

In closing, recently I've been studying the life of George Washington, 
particularly his two terms as President. What's often overlooked is 
that Washington was a big believer in fiscal discipline and 
stewardship. In his farewell address in 1796, Washington spoke to the 
issue of public debt. He urged the new nation to avoid "ungenerously 
throwing upon posterity the burden which we ourselves ought to bear." 
It's remarkable how some words are timeless. 

Today, as in Washington's time, it's essential that we face up to our 
responsibilities and make tough choices. The well-being of America in 
2017 and beyond depends on us doing just that. I am confident that we 
can, we must, and we will ultimately rise to meet our many challenges. 
We just need to do so sooner rather than later. I promise to do my 
part. Today, all that I ask is that each of you does yours. 

Finally, let me remind you that in this great land of opportunity 
anything is possible. In America, persons with a good education, a 
positive attitude, a strong work ethic, and solid moral and ethical 
values have virtually unlimited potential. Your education at Notre Dame 
will give you a strong start. The rest is up to you! As TR said, 
"fighting for the right (cause) is the noblest sport the world 
affords." Do your best to make a difference in whatever you decide to 
do in life. 

May God bless the United States and may God bless each of you. 

On the Web: 

Web site: [Hyperlink,]: 


Paul Anderson, Managing Director, Public Affairs,, 
(202) 512-4800, U.S. Government Accountability Office, 441 G Street NW, 
Room 7149, Washington, D.C. 20548: