David Walker, Comeback America Initiative Release Fiscal Responsibility Proposal
July 20, 2011
On Wed., July 20, David Walker, founder and CEO of the Comeback America Initiative and former United States comptroller general, presented two different proposals to “restore fiscal sanity” during the current debt crisis. CAI is a nonpartisan organization dedicated to fostering a national discussion around fiscal challenges and solutions. The report was prepared at the suggestion of CAI's Board of Directors and Advisory Council. FEI’s president and CEO Marie Hollein is a member of the CAI Advisory Council.
One proposal, the Preemptive (Prudent) Framework, focuses on cutting short-term discretionary spending while at the same time including $500 billion in investments to help stimulate the economy and boost job growth. The proposal includes major reforms for programs such as Medicare and Social Security, as well as cuts to the overall budget, including defense spending. Walker points out that Social Security does not face an immediate crisis, but provides the biggest opportunity to make the program solvent and sustainable.
The other path, the Reactive (Crisis Management) Framework, illustrates what should be done in the case of another crisis similar to that which was experienced in 2008. This approach includes similar spending reduction targets as used in the preemptive approach, but would also call for significant constitutional reforms to reassure foreign lenders and all Americans that the government would not be reverting to past ways once the immediate crisis is over. Walker said that the report is much more long-term thinking and covers more specific details than even the best proposals currently being debated.
One of the big issues currently is that all revenue proposals must start in the House of Representatives and it is extremely difficult to get any legislation that includes tax increase through a Republican-controlled House. Walker explained that we could cut $1 trillion dollars out of the defense budget, another $1 trillion dollars out of health care and third trillion dollars through cutting spending that would be phased in through three years. This means that we could cut $3 trillion dollars without raising any taxes.
While Walker’s deficit reduction and fiscal sustainability plan is intended to put the United States on more firm footing, he indicated the proposal will likely face opposition as the U.S. has tough choices to make to put the county back on the right fiscal path. Walker concluded by explaining that “we must learn from history so that we will not continue to make the same mistakes.”
To read the CAI report, click here.
Prepared July 20, 2011 by Alexandra Sipes, legislative aide, Financial Executives International. This summary does not represent FEI opinion unless specifically noted above.