Download Slide 1

Comeback America: Turning the Country
Around and Restoring Fiscal Responsibility
MIT’s Ethics Initiative
Cambridge, MA
October 6, 2010
David M. Walker
President and CEO
The Peter G. Peterson Foundation
and
Former Comptroller General of the United States
Key Concepts
•
Law
•
Ethics
•
Morality
•
A Higher Calling
•
Stewardship
•
Sustainable Success
•
Leading by Example
36
Duties of Loyalty
“Companies and the directors that oversee them,
especially ones that relate to global entities, do not have
duties of loyalty to countries. They have a duty of loyalty
to their shareholders but should also consider the
interests of key stakeholders. However, if companies,
management and directors fail to pay attention to the key
sustainability challenges that we face as a nation, we will
all pay a high price over time.”
- Hon. David M. Walker, Former Comptroller
General of the United States (1998-2008)
1
The Bottom Line
“If we do not take steps to keep our economy strong for
both today and tomorrow, our national security,
international standing, standard of living, our social
safety net, and even our domestic tranquility will suffer
over time.”
- Hon. David M. Walker, Former Comptroller
General of the United States (1998-2008)
2
Selected Key Sustainability Challenges
•
•
•
•
•
•
•
•
•
•
•
Fiscal
Entitlement Programs
Health Care
Tax System
Education System
Critical Infrastructure
Immigration Policy
Savings Rates
Innovation Gap
Operational Structures and Practices
Dysfunctional Political System
3
Total Federal Spending
(As Percentage of U.S. Economy)
Total Spending
2%
1800
2010
2040
24%
38%
Size of the Total
Economy: $8.8 Billion
Projected Size of the Total
Economy: $14.4 Trillion
Projected Size of the Total
Economy: $28.7 Trillion
(Constant 2009 Dollars)
(Constant 2009 Dollars)
(Constant 2009 Dollars)
SOURCES: Data from the Congressional Budget Office; Long-Term Budget Outlook: June 2010, alternative fiscal scenario. Data from Historical Statistics of the
United States, Millennial Edition On Line, Cambridge 2006. Compiled by PGPF.
NOTE: The alternative fiscal scenario includes several changes to current law that are widely anticipated to occur (i.e. adjustments to Medicare payment rates).
4
The total debt includes debt held by the public (domestic and foreign
investors) and debt the government owes to various government programs*
Trillions of Dollars
16
$ 13.4 Trillion
14
12
Intragovernmental Debt
$4.5 (31%)
Debt Held by the Public
10
8
92 %
of GDP
$ 5.6 Trillion
6
4
$2.2 (23%)
2
$3.4 (35%)
57 %
of GDP
$8.9 (61%)
0
September 30, 2000
August 31, 2010
SOURCES: Data from the Office of Management and Budget, A New Era of Responsibility: The 2011 Budget: February 2010, Historical
Tables; and the Department of Treasury, Daily Treasury Statement August 31, 2010). Compiled by PGPF.
NOTE: Totals may not add due to rounding.
*Intragovernmental debt refers to Treasury securities held by federal trust funds (e.g., Social Security and Medicare) and other
government accounts. Debt held by the public refers to all federal debt held by individuals, corporations, state or local governments, and
foreign entities.
5
Composition of Federal Spending
(% of Total Spending)
Medicare and Medicaid
Net Interest
20%
Social Security
Defense
4%
43%
15%
12%
42%
Other Mandatory
Other Discretionary
19%
21%
61%
20%
34%
19%
7%
Total Spending 1970:
$900 Billion (Constant 2009 Dollars)
6%
15%
Total Spending 2010 (estimated):
$3.5 Trillion (Constant 2009 Dollars)
SOURCES: Data from the Office of Management and Budget, A New Era of Responsibility: The 2011 Budget, Historical Tables; and the
Congressional Budget Office, Preliminary Analysis of the President’s Budget: March 2010. Compiled by PGPF.
6
Mandatory programs and interest costs are taking over more
and more of the federal budget, crowding out important
discretionary programs
Total
Mandatory
38%
Net Interest
7%
Total
Mandatory
62%
Net Interest
5%
Total
Mandatory
82%
Discretionary
18%
Mandatory
Programs
31%
Discretionary
62%
Total Spending 1970:
$900 Billion
Mandatory
Programs
57%
Discretionary
38%
Total Spending 2010:
$3.5 Trillion (est.)
Net Interest
35%
Mandatory
Programs
47%
Total Spending 2040:
$12.3 Trillion (est.)
SOURCES: Data derived from the Office of Management and Budget, FY 2011 Budget, Historical Tables, February 2010; and the Government
Accountability Office, The Federal Government’s Long-Term Fiscal Outlook, January 2010 Update, alternative simulation using Congressional Budget
Office assumptions. Calculated by PGPF.
Notes: Data are in constant 2009 dollars. Mandatory programs include Social Security, Medicare, Medicaid and other entitlement programs.
7
U.S. dependency on foreign lenders to finance the public debt has risen
sharply
1970
1990
2010 est.
Total Debt: $283 billion
Total Debt: $2,412 billion
Total Debt: $8,633billion
Foreign Holdings:
5%
Foreign Holdings:
19%
Foreign Holdings:
46%
SOURCES: Data for 1970 and 1990 from the Office of Management and Budget, A New Era of Responsibility: The 2011 Budget, Analytical
Perspectives, February 2010. Data for 2010 from Department of Treasury, Daily Treasury Statement (June 30, 2010) and Treasury
International Capital Reporting System, April 15, 2010 release. Compiled by PGPF.
NOTE: 2010 data reflects debt levels through February 2010.
8
Since 1800, U.S. Debt Held by the Public has exceeded 60 percent of GDP
(the maximum debt ceiling used by the European Monetary Union) only
during World War II until 2010
Percentage of GDP
120
WWII
100
80
TARP &
Recession
60
Great
Depression
40
Civil War
WWI
20
0
1800
1830
1860
1890
1920
1950
1980
2010
SOURCES: Historical data from the Congressional Budget Office, Long-Term Budget Outlook: June 2009; the Government Accountability
Office, The Federal Government’s Long-Term Fiscal Outlook: January 2010 Update, alternative simulation using Congressional Budget
Office assumptions. Compiled by PGPF.
NOTE: Debt held by the public refers to all federal debt held by individuals, corporations, state or local governments, and foreign entities.
9
The following table illustrates the U.S. government’s explicit
liabilities, commitments, and unfunded social insurance promises
In Trillions of Dollars
 Explicit liabilities
2009
$6.9
$14.1

Publicly held debt
3.4
7.6

Military & civilian pensions & retiree health
2.8
5.3

Other Major Fiscal Exposures
0.7
1.3
0.5
2.0
13.0
45.8
 Commitments & contingencies

E.g., Pension Benefit Guaranty Corporation, undelivered orders
 Social insurance promises
Total
2000

Future Social Security benefits
3.8
7.7

Future Medicare benefits
9.2
38.2

Future Medicare Part A benefits
2.7
13.8

Future Medicare Part B benefits
6.5
17.2

Future Medicare Part D benefits
--
7.2
$20.4
$61.9
SOURCE: Data from the Department of Treasury, 2009 Financial Report of the United States Government. Compiled by PGPF.
NOTE: Numbers may not add due to rounding. Estimates for Medicare and Social Security benefits are from the Social Security and Medicare Trustees
reports, which are as of January 1, 2009 and show social insurance promises for the next 75 years. Future liabilities are discounted to present value
based on a real interest rate of 2.9 percent and CPI growth of 2.8 percent. The totals do not include liabilities on the balance sheets of Fannie Mae,
Freddie Mac, and the Federal Reserve. Assets of the U.S. government not included. Does not include civil service and military retirement funds,
unemployment insurance, and debt held by other government accounts outside of Social Security and Medicare.
10
Without reforms, by 2022, future revenues will only cover Social
Security, Medicare, Medicaid, and interest on the debt. By 2046,
revenues won’t even cover interest costs.
50
45
Percentage of GDP
40
35
9%
Revenue
30
25
20
15
10
5
2%
Other Mandatory
9%
Medicare &
Medicaid
9%
9%
2%
4%
7%
5%
5%
5%
0
2010
1%
Discretionary
Spending
6%
Social Security
Net Interest
18%
6%
2022
2046
SOURCE: Data from the Government Accountability Office The Federal Government’s Long-Term Fiscal Outlook: January 2010 Update,
alternative simulation using Congressional Budget Office assumptions. Compiled by PGPF.
NOTE: Baseline interest rate is assumed to be 5.0 percent.
11
Total government debt in the U.S is higher than some of the most
financially troubled countries in Europe
Percentage of GDP
2010
2015
160
140
120
100
80
60
40
20
0
Greece
Italy
Portugal Ireland
Spain
United United
Kingdom States
SOURCE: Data from the International Monetary Fund, IMF Fiscal Monitor Series: Navigating the Fiscal Challenges Ahead (May 14, 2010). Compiled by
PGPF.
NOTE: Both 2010 and 2015 figures are estimates. Total government debt (also referred to as general government gross debt) measures all liabilities
that require payment or payments of interest and/or principal by the debtor to the creditor at a date in the future. This includes central, state, and
local government debt.
12
Future U.S. Debt Held by the Public is projected to soar if current
policies remain unchanged
900
Percentage of GDP
800
Actual
854%
Projected
700
650%
600
483%
500
400
300
200
344%
60 %
of GDP
233%
146%
87%
100
0
1990
2000
2010
2020
2030
2040
2050
2060
2070
2080
SOURCES: Historical data from the Congressional Budget Office, Long-Term Budget Outlook: June 2009; projections from Long-Term Budget Outlook: June 2010,
alternative fiscal scenario. Compiled by PGPF.
NOTE: Debt held by the public refers to all federal debt held by individuals, corporations, state or local governments, and foreign entities. The alternative fiscal
scenario includes several changes to current law that are widely anticipated to occur (i.e. adjustments to Medicare payment rates).
13
Billions of Constant 2009 Dollars
Foreign purchases of marketable Treasury securities are overwhelmingly in
shorter maturities, indicating sizeable interest-rate risk upon rollover
900
800
700
600
30 years
10 Years
2-7 Years
1 year or less
443
500
400
340
300
200
100
0
291
182
104
46 5
2001
2002
2003
2004
26
7
22
2005
2006
2007
2008
2009
2010
SOURCE: Data from the U.S. Treasury, Office of Debt Management, Investor Class Auction Allotments. Compiled by PGPF.
NOTE: Purchases reflect gross foreign purchases of bills (4-week, 13-week, 26-week, 52-week, and cash-management bills); notes (2year, 3-year, 5-year, 7-year, and 10-year) and bonds (30-year). Data excludes sales of Treasury Inflation Protected Securities (TIPS), and
also is not net of sales. Foreign purchases for 2010 as of June 2010.
14
Current Treasury interest rates are low by historical standards
16
3- Month
14
10-Year
12
Average
Interest Rate:
6.5% over past
30 years
30-Year
10
8
6
4
2
0
1980
1985
1990
1995
2000
2005
Aug-10
SOURCE: Data from the Federal Reserve Statistical Release, Table H.15, Selected Interest Rates, Historical Data, accessed August 16,
2010. Complied by PGPF.
NOTE: The U.S. Treasury Department did not offer 30-year bonds between 2003 and 2006.
15
A rate increase of just two percent from baseline levels of 5.0
percent have a dramatic effect on interest costs
25
Additional Interest from
Rate Increase from 5.0% to
7.0%
Baseline Net Interest
Percentage of GDP
20
5.7%
of
GDP
15
10
14.1%
of
GDP
5
0
2010
2015
2020
2025
2030
2035
2040
SOURCE: Data from the Government Accountability Office The Federal Government’s Long-term Fiscal Outlook: January 2010, alternative
simulation using Congressional Budget Office assumptions. Compiled by PGPF.
NOTE: The projections use implied CBO interest rates through 2020, and an interest rate of 5.0 percent thereafter.
16
Social Security Cash Surpluses (+) and
Deficits (-) as a Percentage of GDP
Since its inception, the Social Security program has experienced more
surpluses than deficits
1.0
0.8
0.6
0.4
0.2
0.0
-0.2
-0.4
1936
1944
1952
1960
1968
1976
1984
1992
2000
2008
SOURCE: Data from the Office of Management and Budget, FY 2011 Budget, Historical Tables, February 2010 and Social Security
Administration, 2010 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability
Insurance Trust Funds, August 2010. Compiled by PGPF.
NOTE: Excludes interest earnings.
17
Total U.S. health expenditures (both public and private) are
projected to soar to more than one-third of the economy by 2040
40
Actual
Projected
34 %
Percentage of GDP
35
29 %
30
25
22 %
20
17 %
15
12 %
10
5
5%
7%
13 %
8%
0
1960
1970
1980
1990
2000
2010
2020
2030
2040
SOURCE: Data from the Congressional Budget Office, The Long-Term Fiscal Outlook: June 2009. Compiled by PGPF.
18
Generally, while the U.S. spends more on health care than other
countries, its health outcomes are no better
Outcome
15%
29%
Heart
Attacks
64%
• U.S. = 4 deaths per 100 people in 2005
Life Expectancy at 65
• U.S. = 17.4 years for men (2006)
20.3 years for women (2006)
Rank
(out of countries reporting)
34%
9th out of 23
19th out of 30, men
15th out of 30, women
Infant Mortality
• U.S. = 0.7% deaths per live birth in 2006
Obesity
• U.S. = 34% over age 15 in 2006
28th out of 30
14th out of 14
SOURCE: Data from OECD, Health Data 2009 (November 2009). Compiled by PGPF.
Chart 29
19
The U.S. spent more on defense in 2008 than did the countries with
the next 14 highest defense budgets combined
700
In billions of dollars
600
$581 billion
500
400
300
India
Saudi Arabia
Italy
Japan
Germany
Australia
$607 billion
Spain
Canada
Brazil
South Korea
U.S.A.
Russia
200
100
UK
France
China
0
SOURCE: Data from Stockholm International Peace Research Institute, 15 Major Spender Countries in 2008. Compiled by PGPF.
20
Individual income and payroll taxes comprise most of federal
receipts
2010: Total Revenues
$2,177 billion
Corporate Income
Taxes
7%
Payroll Taxes 40%
Other
9%
Individual Income
Taxes
43%
Excise
3%
Estate and Gift 1%
Customs Duties 1%
Miscellaneous
4%
SOURCE: Data from the Congressional Budget Office, Preliminary Analysis of the President’s Budget, March 2010. Compiled by PGPF.
21
“Tax expenditures,” (deductions, credits, and other special provisions)
total an estimated $1 trillion annually and provide substantial benefits
that are not reflected in the budget
Top 5 Tax Expenditures
Estimated Tax
Revenue Foregone
(FY 2010)
1. Exclusion of employer provided health insurance from taxable
income.*
$262 billion
2. Exclusion of pension contributions and earnings.**
$122 billion
3. Deduction of mortgage-interest on a primary residence.
$92 billion
4. Deduction of non-business state and local taxes (includes
income, property and sales taxes)
$53 billion
5. Capital gains (except agriculture, timber, iron ore, and coal).***
$45 billion
Total of Top 5
$573 billion
SOURCE: Data from the Office of Management and Budget, A New Era of Responsibility: The 2011 Budget, Analytic Perspectives, February 2010.
Compiled by PGPF. NOTE: Numbers may not add due to rounding.
* Includes the exclusion from payroll taxes and income taxes.
** Includes employer pension plans, employee and employer contributions to 401k plans, IRAs, and Keough plans.
*** In addition, the biodiesel producer tax credit results in a $200 million reduction in excise tax receipts in 2010.
22
The top 5 corporate tax expenditures, deductions, credits and other
special provisions are relatively small compared to the largest tax
expenditures
Top 5 Corporate Tax Expenditures
Tax Revenue Lost
(FY2010)
1. Deferral of income from controlled foreign corporations
$31 billion
2. Deduction for U.S. production activities
$8.8 billion
3. Credit for increasing research activities
$5.8 billion
4. Deferred taxes for financial firms on certain income earned
overseas
$5.5 billion
5. Credit for low-income housing investments
$ 5.4 billion
Total of Top 5
$56.4 billion
SOURCE: Data from the Office of Management and Budget, A New Era of Responsibility: The 2011 Budget, Analytic Perspectives, February
2010. Compiled by PGPF.
NOTE: Numbers may not add due to rounding.
23
High-income households earn a disproportionate share of pre-tax
income and pay a disproportionate share of total federal taxes
100
Top 0.5%
(15% )
90
Top 0.5%
(23% )
80
Percent
70
55%
Top Quintile
$67,400+
69%
60
Fourth Quintile
$45,200-$67,399
50
40
30
Middle Quintile
$30,500-$45,199
20%
20
13%
17%
10
8%
9%
0
Share of Total PreTax Income
4%
Share of Total
Federal Taxes
4%
1%
Second Quintile
$17,900-$30,499
Lowest Quintile
Less than$17,900
SOURCE: Congressional Budget Office, Historical Effective Tax Rates: 1979- 2005: Additional Data on Sources of Income and High-Income
Households December 2008. Compiled by PGPF.
NOTE: Data for 2005 in 2005 dollars.
24
Effective median individual income tax rates are negative or zero for
households with incomes below $34,800
Percentage of Total Income
20
18.8%
15
10.8%
10
6.4%
5
3.2%
0%
0
-5
-4.2%
-10
Lowest Quintile Second Quintile Middle Quintile Fourth Quintile
<$17,800
$17,800$34,800$63,400$34,800
$63,400
$104,200
Top Quintile
$104,200+
Top 1%
$532,500+
SOURCE: Data from the Tax Policy Center. Compiled by PGPF.
25
U.S. household debt has reached historically high levels as a percent
of disposable income
122%
Household Debt as a Percentage of
Disposable Income
140
120
100
80
60
251%
Increase
since 1950
35%
40
20
0
1950
1960
1970
1980
1990
2000
2010 (Q1)
SOURCES: Data from the Federal Reserve, Flow of Funds Accounts—Liabilities of Households and Nonprofit Organizations; and Bureau of
Economic Analysis, Personal Income and Its Disposition: February 2010. Compiled by PGPF.
26
Current U.S. personal savings as a percent of disposable income has
fallen to historically low levels
Percentage of Disposable Income
30
WWII
25
20
15
10
Great
Depression
4.3%
5
0
-1.7%
-5
1930
1940
1950
1960
1970
1980
1990
2000
2009
SOURCE: Data from Bureau of Economic Analysis, Personal Income and Its Disposition: February 2010. Compiled by PGPF.
27
The net national savings rate is at its lowest level since the Great
Depression
20
WWII
16.1%
Net National Savings
as a Percentage of GDP
15
10
Great
Depression
5
0
-2.5%
-5
-10 -7.5%
1930
1940
1950
1960
1970
1980
1990
2000
SOURCE: Data from the Bureau of Economic Analysis, National Income and Product Accounts. Compiled by PGPF.
NOTE: The net national savings rate comprises both public and private savings net of consumption-related expenditures.
28
State and local governments face short and long term fiscal challenges
as their negative operating balances continue to grow
3
Percentage of GDP
2.5
2
1.5
1
0.5
0
-0.5
-1
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
SOURCE: Data from the General Accountability Office State and Local Government’s Fiscal Outlook March 2010 Update, alternative simulation.
Compiled by PGPF.
29
Future state & local expenditures on health care are the primary
source of their poor fiscal outlook.
Non-Health Expenditures
12
Health Expenditures
Percent of GDP
10
8
6
4
2
0
2000
2010
2020
2030
2040
2050
2060
SOURCE: Data from the General Accountability Office State and Local Government’s Fiscal Outlook March 2010 Update. Compiled by PGPF.
NOTE: State level health expenditures are primarily Medicaid and health insurance for government employees and retirees.
30
Unfunded Federal and State Employee Retirement Liabilities
in Fiscal Year 2008
In Billions of Dollars (Present Value)
$4,000
$3,500
$3,000
$1,162
Pension Liabilities
Health Liabilities
$2,500
$2,000
$1,500
$2,609
$1,000
$555
$500
$456
$0
Federal Civilian and Military Retirement
Liabilities
State Employee Retirement Liabilities
SOURCE: Pew Center on the States, The Trillion Dollar Gap February 2010; U.S. Treasury Department Financial Report of the U.S. Government 2008.
NOTE: Data is as of the end of fiscal year 2008. The unfunded liability is the difference between the present discounted value of future liabilities and current
assets. For the purposes of converting future liabilities into present value, most states use a discount rate of approximately 8%, based on assumed returns on
investing their pension funds.
31
Federal and State Employee Retirement Liabilities
in Fiscal Year 2008
State Pension Liabilities
Unfunded
16%
Funded
84%
State Health Liabilities
Funded
5%
Unfunded
95%
SOURCE: Pew Center on the States, The Trillion Dollar Gap February 2010; U.S. Treasury Department Financial Report of the U.S. Government 2008.
NOTE: Data is as of the end of fiscal year 2008. The unfunded liability is the difference between the present discounted value of future liabilities and current assets.
For the purposes of converting future liabilities into present value, most states use a discount rate of approximately 8%, based on assumed returns on investing their
pension funds.
** The data have a few limitations. States have different methods in computing their obligations, and different assumptions of retirement ages and life spans. They
also conduct actuarial valuations at different times of the year, which can cause their funding levels to appear better or worse off depending on economic
conditions .
32
Share of State Revenue in Percent
Actuarially Required Contribution to Retiree Health and Pension
Funds (as a Share of State Revenue) in Fiscal Year 2008 **
30
25
20
Retiree Pension Benefits
16.4 %
14.5 %
Retiree Health Benefits
16 %
15
10
5
0.6 %
12.1 %
11.8 %
9.5 %
6.6 %
0
New Jersey Alabama
Hawaii
Iowa
0.6 %
1.4 %
6.3 %
5.7 %
4.3 %
4.1 %
Minnesota Wisconsin New York
NOTE: The actuarially required contribution is the annual contribution to the retiree pension and health funds required for future assets to be in
line with future liabilities within 30 years. It has two components: a normal contribution to keep up with new benefit obligations accrued, and a
catch-up payment to make up for the current gap between pension assets and liabilities. The data for both revenues and unfunded obligations are
for fiscal year 2008. Most states end their fiscal year in June of 2008, and therefore these numbers do not include losses in the stock market that
led to losses in most pension funds.
** The data have a few limitations. States have different methods in computing their obligations, and different assumptions of retirement ages and
life spans. They also conduct actuarial valuations at different times of the year, which can cause their funding levels to appear better or worse off
depending on economic conditions .
33
Moody’s Rating Structure
Obligation Rating
Top Rating/
Minimal Risk
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
B2
B3
Caa1
Caa2
Caa3
CA
C
Bottom Rating/
Typically in Default
SOURCE: Data from Moody’s Investors Service, Government-Related Issuers: Methodology Update, July 22, 2010. Compiled by PGPF.
34
State and City Moody’s Ratings
State
City
Georgia –Aaa
Alexandria, VA - Aaa
Texas - Aaa
Jacksonville, FL – Aa1
Virginia -Aaa
Atlanta – Aa2 /A1
Alabama – Aa1
Houston – Aa2
Florida –Aa1/Aa2
New York – Aa2
New York – Aa2
Washington, DC – Aa2/Aa1
Connecticut – Aa2
Bridgeport, CT – A1
California – A1
Miami - A1
SOURCE: Data from Moody’s website, Compiled by PGPF.
* Most recent rating available is from 2005.
35
Key Systematic Factors Driving Deficits and Debt at the
Federal, State and Local Levels of Government
•
Expansion of government at all levels
•
Health Care Costs
•
Retirement Income Costs
•
Disability and Welfare Related Costs
•
Critical Infrastructure Needs
•
Education Costs
•
Outdated and Inadequate Revenue Systems
•
Myopia, tunnel vision, special interests and self-interest.
36
A Way Forward
Federal:
•
Implement statutory budget controls that address discretionary and
mandatory spending as well as tax preferences in order to stabilize our
debt/ GDP at a reasonable level
•
Achieve Social Security reform that makes the program solvent, secure,
sustainable, more savings oriented
•
Reduce the rate of increase in health care costs and more effectively
target related taxpayer subsidies and tax preferences
•
Ensure that all future health care reforms adequately consider
coverage, cost quality and personal responsibility
•
Pursue comprehensive tax reform to make system more streamlined,
simple, equitable and competitive while generating adequate revenues
37
A Way Forward- Continued
•
•
Review, re-prioritize and re-engineer the base of the federal
government to focus on the future and generate real results
Ensure that we have process that will enable us to achieve the above
objectives within a reasonable period of time
State and Local:
•
•
•
•
Reform pension and health systems to make them reasonable,
affordable and sustainable
Review, re-prioritize and re-engineer the base of government.
Pursue comprehensive tax reform in coordination with the federal
government.
Consider an exchange of primary roles, functions and revenue sources
as part of a new federalism or devolution effort (e.g., health care,
education, infrastructure)
38
A Way Forward
“Yes, we can do what it takes to create a
better future, but we all must do our part,
and we need to start now.”
- Hon. David M. Walker, Former Comptroller
General of the United States (1998-2008)
39