Keeping America Great
GAO-06-1038CG: Published: Mar 6, 2006. Publicly Released: Mar 6, 2006.
This speech was given by the Comptroller General before the John F. Kennedy Forum--Leadership Symposium at the JFK School of Government at Harvard University, on March 6, 2006. In my view, the greatest threat to America's future isn't hiding in a cave somewhere in Afghanistan or Pakistan; it's right here at home, in our governments, in our businesses, on our campuses, and in our neighborhoods. What I'm talking about is declining values and comity combined with continuing ignorance, apathy, and inaction on a range of issues that are rapidly reshaping our nation and our world. These issues include changing demographics, global economic trends, new security threats, and serious challenges in such areas as education, energy, health care, and the environment. Several of these challenges are unprecedented in their size, scope, complexity, and potential impact. Unfortunately, these issues are getting too little attention, provoking too little concern, and prompting too little action. Tonight, I'm going to talk about some of our challenges to give you a better sense of where we're headed and why it's so urgent that we transform government, and do it very soon. I'm then going to talk about the need for real leadership and what each of us can do to help keep America great. What are these known changes and challenges? Let me start with one of the most sweeping agents of change, and that's demographics. Demographics will decisively shape the American and global landscape in the future. Beyond demographics, the United States confronts a range of other challenges. Globalization is affecting our international competitiveness, our trade posture, our capital markets, our jobs, and our approach to environmental and public health issues. For example, globalization is a key reason public health experts are so concerned about the rapid spread of viruses like avian flu. Other challenges come from technology. In recent decades, spectacular advances in technology have transformed everything from how we do business to how we communicate to how we treat and cure diseases. But because of technology, we're also struggling with privacy, security, and other concerns. Perhaps the most urgent challenge we face is our nation's deteriorating financial condition and growing fiscal imbalance. The United States now confronts four interrelated deficits with serious implications for our role in the world, our economic growth, our standard of living, and even our national security. The first deficit is the federal budget deficit, which in 2005 was around $319 billion on a cash basis. The second deficit is our savings deficit. Too many Americans--from individual consumers to elected officials--are spending today as if there's no tomorrow. So, if we aren't saving at home, who's been underwriting America's recent spending spree? The answer is foreign investors. And that brings me to America's third deficit--our overall balance-of-payments deficit. Finally, there's our fourth deficit, and it's probably the most sobering deficit of all. What I'm talking about is America's leadership deficit.
Our population is aging. At the same time, U.S. workforce growth is slowing. This means that just when increasing numbers of baby boomers are starting to retire and draw benefits, there will be fewer workers paying taxes and contributing to social insurance programs. Importantly, retirees are living longer but wanting to retire earlier. These developments are going to put huge strains on our pension and health care systems. With the end of the Cold War, we face new security threats, including transnational terrorist networks and rogue states armed with nuclear weapons. On an accrual basis, our fiscal 2005 deficit was $760 billion, up $144 billion in the last year alone. Even more troubling, the federal government's long-term liabilities and unfunded commitments for things like Social Security and Medicare benefits have risen to more than $46 trillion. That's up from about $20 trillion just five years ago. The new Medicare prescription drug benefit, which may be one of the most poorly designed, inefficiently implemented, and fiscally irresponsible government programs of all time, has added more than $8 trillion to this sea of red ink. And these numbers don't even take into account the bills that are coming from rebuilding New Orleans and the Gulf Coast or future costs associated with Iraq and Afghanistan. Our quality of life in many ways has never been better. But America also faces a growing and unhealthy gap between the haves and the have-nots. And as some of you may know firsthand, we're also facing a range of quality-of-life concerns in our personal lives, including underachieving public schools, gridlocked city streets, and the stresses of caring for aging parents and growing children all at once. At the same time, our nation's health care system is in critical condition, plagued by growing gaps in insurance coverage, soaring costs, and below-average results on basic measures like medical error rates, infant mortality, and life expectancy. America is simply spending more than it's producing. In 2005, the U.S. trade deficit hit about $726 billion, up more than $100 billion from the prior year. While our own saving rates have plummeted, savings rates abroad have not, and overseas money has been pouring into the United States. Thanks to the high savings rates in China, Japan, and elsewhere, it's been relatively cheap for Americans to borrow. But there's a catch, and it's a big one. Increasingly, we are mortgaging our collective future, and some of our leading lenders may not share our long-term national interests. Not enough key policymakers are concerned about America's growing fiscal imbalance and the other long-term challenges that I've mentioned. As a result, there have been pitifully few calls for making tough choices or fundamental reform. If our nation is to be prepared for the challenges and changes that are coming, government transformation is essential. The challenges I've discussed aren't partisan issues, and the solutions won't be either. Nothing less than a top-to-bottom review of federal programs and policies is needed to determine if they are meeting their objectives. This will also help free up resources for other needs. Congress and the President need to decide which policies and programs remain priorities, which should be overhauled, and which have simply outlived their usefulness.