"I would argue that the most serious threat to the United States" "Is not someone hiding in a cave in Afghanistan or Pakistan" "But our own fiscal irresponsibility" "The president of the united states" "Ronald Reagan:" "These United States are confronted with an economic affliction of great proportions" "Richard M. Nixon:" "America maybe heading for a recession" "Gerald R. Fort:" "And I must say to you that the state of the union is not good" "Richard M. Nixon:" "We're engaged in a long and hard fight against inflation" "Jimmy Carter:" "Our trade deficit is too large" "Gerald R. Fort:" "Part of our trouble is that we have been self-indulging" "And now the bill has come due" "Ronald Reagan:" "Unless we act forcefully, and now, the economy will get worse." "Richard M. Nixon:" "But I pledge to you tonight that full power of this government will be used to keep American's economy producing." "George W. Bush:" "We need a spending discipline in Washington D.C." "Gerald R. Fort:" "And thus restore balance to our economy" "Lyndon B. Johnson:" "We will continue along the path toward a balanced budget." "George H. W. Bush:" "When it's balanced we will start paying off the national debt." "William J. Clinton: and now we are on course for budget surpluses for the next 25 years." "John F. Kennedy:" "A strong nation and economy requires more than a balanced budget." "Jimmy Carter:" "Only a true partnership between government and people can ever hope to reach these goals." "Ronald Reagan:" "We must act today in order to preserve tomorrow." "We must solve problems, no leave them to future generations." "We won't leave it to our children and grandchildren" "William J. Clinton:" "We must not go back to unwise spending" "Dwight D. Eisenhower:" "We must strive to break the calamitous cycle" "Gerald R. Fort: and help dispel the uncertainty that so many feel about our economy." "George W. Bush: and tonight that course goes on." "God bless you." "What hit the economy first was a housing slump." "Fear has spread the Wall Street." "Consumer's tighten their purse strings." "U.S. Federal Reserve cut its key interest rate by half a point." "The eye-word inflation has come to ..." "Major development on the landing crisis" "And gold price is spiking" "Nuclear strike on our financial market" "And it's complicated where we are on the election cycle" "Huge disconnects between Wall Street and Main Street." "Who is David Walker and why should we care?" "He's the nation's top accountant." "The Controller-General of the United States." "He's totaled up the government's income, liabilities and future obligations" "And concluded that the current standard of living is unsustainable" "Unless some drastic action is taken" "And he's not a lump." "I'm David Walker, the controller-general of the United States." "I'm head of the U.S. Government Accountability Office, better known as the GAO." "We are in a legislated branch of government" "Basically we are about improving transparency, enhancing government performance." "And ensuring accountability for the benefit of the American people." "I was said to be crew of military and I had an appointment to the Naval and air-force academy" "But I couldn't go with the last minute because I had a bad left ear" "And it kept me out of my military career." "I knew it was only a matter of time before I decide to serve my country in some way." "And I've been fortunate to have three presidential appointments." "One from Reagan, one from Bush 41, and this one from Clinton." "It's been a pleasure and honor to serve my country." "We suffer from a fiscal cancer." "It is growing within us." "And if we do not treat it, it could have catastrophic consequences for our country." "I don't know" "I'm guessing, quite a bit..." "I wouldn't know that" "Like... three million?" "I know it's in billions." "I have no idea." "Billions or trillions" "I know it's a lot more than it was, probably, ten years ago." "Take a stab at it 69 billion?" "It's probably huge." "What if I told you it's 8.7 trillion dollars?" "That's pretty crazy." "It shouldn't be that way." "8.7 trillion dollars." "Just how much money is that?" "With the number of this large, it helps to compare it to the overall size of the America's economy." "What economists call the Gross Domestic Product, or GDP." "In February, 2007, when our federal debt was 8.7 trillion dollars" "Our GDP was around 13.5 trillion" "That meant that our federal debt was about 64 per-cent of our GDP." "This level of debt to GDP is not the real problem." "It's where we were headed that matters." "And it is projected to get much worse in the future." "In addition, as you'll find out soon, this 8.7 trillion dollar number" "Is only a fraction of our nation's total fiscal challenge." "Senator Gregon, members of the committee" "Thank you for inviting me to discuss solutions to the nation's long-term fiscal challenges." "I'm Robert Bixby, the executive director of the Concord Coalition." "It's a nonpartisan organization, it's a grassroots organization" "And we advocate fiscal responsibility." "Our current fiscal policy is unsustainable" "Most people, from the left for the right agree on that" "They may disagree on how to deal with it" "But most people think that eventually the fiscal policy of the country is headed over a cliff." "This is the federal budget for 1988" "It's jam-packed with numbers and it's got some descriptions on the beginning" "Of the programs that the president was pushing." "Here is the budget for 2005, for a couple of years ago." "The main budget document has..." "It has some numbers in it, it has pictures" "There's a lot of color pictures in it and glassy paper and things." "It's not what it used to be" "When you just had numbers and some descriptions of the programs" "It's kind of a metaphor of what's happened with federal government." "Here we go" "If you just joined us, David Walker, who is Controller-General of the U.S. is here in the studio with us" "For the past few years you've gone around the country on what you called" ""Fiscal Wake-up Tours"" "Tell us what those are, and why are you doing this." "There's a coalition of groups that has come together" "The key players are the Concord Coalition, the Brookings Institution, the Heritage Foundation" "And myself, as the Controller-General of the United States." "We have many other organizations involved as well" "But those are the 4 cornerstones." "What we are doing is we are go outside the beltway" "To state the facts and speak the truth of to the American people" "To help them understand where we've been, where we are, where we are headed." "Because my view is the only way the elected officials are gonna make the tough choices" "Is the people understand that the need for these choices." "And will not punish them for doing what's right for America's future." "The facts aren't Democrat or Republican." "The facts aren't Liberal or Conservative." "The facts are the facts." "And there's broad-based agreement among the Fiscal Wake-Up Tour participants that spanned the political spectrum" "Our financial condition is worse than advertised and we need to act soon because time is working against us" "America faces four serious deficits today" "The first is the budget deficit" "The second is a saving deficit" "The third is a balance of payments deficit, of which the trade deficit is a subset." "And the forth and the most serious of all, is a leadership deficit." "How can this be happening to the richest country in the world?" "We've lost our way, quite frankly, let me tell you how we got to where we are." "Today's federal debt is the some of all our annual budget deficits and surpluses going back to the beginning of our federal government" "Our war friend of dependence created much of our early debt" "And by March 4, 1789, the first day of our federal government" "Our national debt was 75 million dollars" "Which was about 40 percent of our economy." "This terrified our founding fathers, and they acted quickly to pay it down." "We didn't stay there for long" "The civil war not only had a huge human cost" "It brought America to the brink of bankruptcy." "However, like before, we paid our debt down quickly." "In 1913, the Federal Reserve system was created to help manage the nation's money supply" "And oversee national banks" "That year was also the birth of modern income tax." "World War One was supposed to be the war that end all wars." "Several years later" "The great depression brought with an extreme economic hardship of millions of Americans" "This social security measure gives at least some protections to 30 million of our citizens" "It is insurance that you and your employers have bought and paid for" "World War Two was a time of sacrifice" "And while the government took unprecedented level of debt" "Americans bought savings bond that financed us winning the war." "And now ladies and gentlemen, Mr. Humphrey Bogart" "Our fighting man has just won history's greatest victory for freedom" "Buy bond for their future and for your own future." "We have another bond to buy..." "It's official, it's all over" "It's total victory" "The large military in social spending practices in 1960s and 70s" "Were two key factors that lead to a major economic downturn by the end of 1970s" "The 1980s saw the rise of supply-side economics" "It's morning again in America. "Reagonnomics"" "You're rather a trickle-down theory guy" "I bet my reputation on it" "The controversial Laffer Curve proposes lower marginal tax raise would eventually generate higher tax revenues." "The theory did have its credits" "Let me just feed you a difference that I have with governor Reagan on taxes" "It is what I call a voodoo economic policy" "For decades, we have piled deficit upon deficit" "Mortgaging our future on our children's future" "For the temporary convenience of the present" ""Read my lips:" "No New Taxes"" "The debate over supply-side economics continues to this day" "But what is not debatable is the federal debt exploded in the 1980s." "A fundamental shift had occurred" "America was becoming addicted to debt." "Never before in our history had so much debt been created during a era of relative peace and prosperity yes, the cold war ended but it came at an extremely high price and people from across the political spectrum were becoming very alarmed." "You know I lost a lot of weight when I was in college, deliberately" "Back in those days, this was the drink, Jab" "Back in 1992, Warren Rudman the republican senator" "And Paul Tsongas, a Democratic presidential candidate" "Along with former Commerce Secretary P. Peterson founded the Concord Coalition because they were very concerned about the budget deficit at the time and also the long-term outlook" "We believe that the Concord Coalition will be a powerful grassroots organization" "They will say to the politicians all across this country" "That the American people are ready for truth" "We're now borrowing 22 cents of every dollar that we are spending" "And the fact we are doing is we are slipping this huge hidden check for our free lunch to our children and our grandchildren" "And you ain't seeing nothing yet." "This is the issue that the Concord Coalition was formed to address" "So yes, I do feel particular responsibility to advance the course" "And things like this, like today's hearing is a great opportunity to do so" "They'll come along all the time" "Some people say this is just gloom and doom" "You talk about all this terrible numbers and statistics" "If this were gloom and doom we wouldn't be doing it." "It's a lot like dieting, a budget is a diet." "The only way you could really lose weight is to get more exercise or to eat less" "There're really only two ways that you can balance the budget" "You can cut spending or you can raise taxes." "And people don't necessarily like those hard choices." "So they look for easy solutions." "I especially want to welcome the really outstanding witnesses we have here today" "Robert Bixby the executive director of the Concord Coalition" "That does such good work and trying to alert the nation as to the risks of our fiscal imbalances." "Dr. Joe Mineric..." "The budget committee sort of think of it as Mom and Dads sitting around the kitchen table" "At the beginning of the year, figuring out what we can afford" "And everybody comes up with them was ideas of the new things that the family needs" "And they have to sort of look at how much income they are gonna have" "And how much they can afford to spend" "The family hasn't been doing too well" "We've been running deficits of 200 to 300 billion dollars." "Which is quite a bit money." "We're involved, all of us here, at the table in the fiscal wake-up tour" "David Walker was involved in that as well" "And we've been going around the country" "Holding town hall meetings and talking to the local media" "We are finding public seems to be willing to hear the tough choices" "What they want to make sure is you are serious about them" "Everybody realizes that sort of family budget is unsustainable over the long term" "And the family is gonna be in a lot of trouble." "2008?" "6,100?" "3,300?" "2,040?" "6,070?" "9,360?" "2,440?" "2008?" "12,200?" "9,100?" "3,450?" "460?" "4,100?" "In the last 40 years we've had 35 budget deficits and only 5 budget surpluses" "But remember, we've been running a large annual surpluses on social security programs for years" "These surpluses have been spent every year to help pay other bills in the federal government" "Without the social security surpluses, our real track record on deficits looks a whole lot worse" "This is something that's utterly unsustainable" "Remember all of that has happened before the baby-boomers retire" "And the baby boomers are not a projection" "They are born, they are out there" "They are gonna be eligible for social security and medicare" "Yet, we can't pay our bills now." "In less than 10 years, social security will be paying out more than it takes in" "And it will only get worse when the baby boomers retire in larger and larger numbers" "By 2017, social security will not help reducing our overall deficit, it would be adding to it." "Our enormous medicare deficits and other federal spending that also lie ahead" "Will only make this situation worse." "The only issue that's more severe than this would be the idea that an Islamic fundamentalist would get his or her hands on a nuclear weapon used against us" "Beyond that there is nothing more severe than this" "This issue represents the potential fiscal meltdown of this nation" "And it absolutely guarantees if it's not addressed that our children will have less of a quality of life than we've had." "That they will have a government they can't afford, and that we will be demanding so much of them in the area of taxes that they will not have the money to send their kids to college or buy that home or just live a good quality life." "Obviously if the public doesn't understand" "There is gonna be no sense of urgency" "No pressure on our colleagues or the white house to act" "Right now, if you look at the federal budget" "It's running a deficit, and it will probably run a deficit for the next several years" "Those deficit are not off the charts" "They've been there before" "But what is really worrisome is the longer run future." "If you look at just three programs, medicare, mediaid, and social security" "The spending for those programs under current rules will rise very rapidly over the next few years" "Indeed for the foreseeable future" "Longevity increases and rising medical care spending" "Are symptoms of being a rich country" "However, we can do something about it" "Unless we are willing to raise taxes and keep on raising them or close down the rest of the federal government we've got a very big problem staring us in the face" "(Smile)" "Jefferson, went on record saying that it was immoral" "For one generation to load up the next generation with debt" "In private life we don't do that" "A person goes to his grave his debts go with him more or less" "But in public we do" "In public we have the system whereby one generation can spend money before it's been earned" "It spends money and somebody gotta pay that money in the future" "And the somebody is the next generation" "To me it is a immoral situation." "It's not just immoral, it's just fundamentally wrong and mean" "For one generation to spend the next generation's money." "2007?" "America!" "You want any of this?" "If you don't start learning about the debt" "You are the reason of the national debt" "Buddy you are scared." "I know I am scared" "When we thought of the idea of starting to act" "The goal was to be the face of generation that's gonna be affected by" "By national debt and try to put human touch to it." "All I gotta say is talk to your congressman, talk to your senator" "Talk to the G.B. president" "Cuz' we gotta fix this problem." "It stinks, you know" "Our parents talks our ear off from the time we are tied about financial responsibility" "This is what you have to do" "Don't get into credit card" "You have to pay for what you buy" "You have to save your money" "And then the politicians that were supposed to represent your values, represent what you want" "They are doing the same thing" "They are telling you one thing and doing another thing" "Would you like to go on a date with me?" "That would be no" "Would you like to learn about the debt?" "Yes." "You kind of want to look at them and say how can you not realize this is going to damage our future" "I mean, this situation is comparable to my parents incurring serious credit card debt" "Before I was born, and throw my entire life time." "And expecting me to pay for it some point in the future." "That's insane." "We are not playing." "We are not in a play." "We are serious." "Whenever you talk to someone about the problem" "There is: 'yeah, that's interesting, that's awesome.'" "That's about it." "It's hard to really really get kids inspired" "But I think we are starting to do that, we are starting to get a lot of interest." "Especially with the 2008 election." "The youth suddenly realizes they do have a voice" "That the kids are now taking actual steps." "That's really nice to see it." "It sort of gives you hope." "You know, ther is this perception that" "Probably public doesn't care about it." "These are just numbers." "It's boring stuff." "When we go out and do our town hall meetings, people love it." "What they are frustrated with is that they can't get straight answers from politicians" "Or that they're told things that just don't make sense." "Like:" "Oh, we can cut taxes and add a prescription drug benefit to medicare" "Instinctively people think that :" "I don't think that adds up." "But this guy is telling me that we can have it all" "So, Okay, all right I'll vote." "I'll vote for them." "The Concord coalition has never taken a position on big government verses small government" "The point is we are running a complete schizophrenic tax and spending policy right now" "We've got a big government spending program" "A small government tax program" "Which is a recipe for deficits as far as I can see." "This is the most sophisticated chart you are ever gonna see" "It illustrates the problem" "My name is Scotts Bradley" "I am a political reporter for WMUR-TV and ABC affiliate here in New Hampshire" "(B-I-X-B-Y?" ")" "Yankee frugality is alive and well here in New Hampshire" "When it comes to numbers and crunching the dollar signs" "This is the state where this type of dialogue makes a lot of sense." "No one covers New Hampshire like we do" "We are WMUR News 9" "Now at 5:00 live ..." "Off the top of my head is the type of the story that will probably put into the middle of the news cast" "A readme dialogue" "Something that will try to bring some attention to what the effort is what the tour is" "And I'm sure we'll get some moderate play in the news" "And in other new tonight a man allegedly steals a diamond ring" "Then swallows it in front of the police" "Our Heather Hanbro is live in Hollas tonight with quite a bizarre story" "Heather?" "~" "This 7,000-dollar diamond engagement ring won't be going on anyone's finger any time soon" "Our federal financial problem is worse today than it was in 1992." "But back then, the media, business leaders, along with Ross Perot and Paul Tsongas" "Made fiscal responsibility a key issue during the presidential campaign" "The country woke up, recognized the challenge" "And demanded a change." "We come here today, Democrats and Republicans" "To celebrate a true milestone for our nation." "In a few moments I will sign the law of the first balanced budget in the generation." "Politics, or sound fiscal policy is very difficult." "Because the natural inertia in a political system, if you will" "Is towards federal programs" "Most of which are very useful" "The inertia is spending on the one hand" "And tax cuts on the other hand" "But if you are gonna have sound fiscal conditions" "You have got to both constrain your spending" "And you also have to provide for adequate revenues" "And what all to believe is involved are very difficult trade-off decisions" "Involving in federal programs and what American people want their government to do" "And then providing the means to pay for it." "I left Treasure in July, 1999" "In 1998, the federal government of the United States had a fiscal surplus" "For the first time in, roughly speaking, 30 years." "And the projections forward based on the fiscal policy then in place" "We offer continue surpluses for long into the future" "And I thought what had happened" "I shall not say "what I thought"" "What had happened, was that a political coalescence had occurred, well developed." "Around maintaining fiscal discipline which is a very difficult thing to do politically" "Because it requires spending constraint and adequate revenues." "And I thought we run that track." "It happened this week." "Something few of us thought we'd ever see" "The national debt clock was turned off at noon last Thursday" "Having outlived its purpose." "While the national debts are they disappeared?" "Since we are in the 5-trillion-dollar rich" "It is slowly winding down" "Having dropped by over 100 billion dollars since the first of the year" "Did you know millions of Americans live with a debt they cannot control?" "This is why I developed this unique program managing your debt." "It's called "Don't Buy Stuff You Cannot Afford"" "Wow, let me see that" "If you don't have any money you should not buy anything" "Hmm, sounds interesting" "Sounds confusing" "I don't know honey." "This makes a lot of sense." "There's a whole section here." "How to buy expensive things using money you saved" "Give me that" "And where would you get that "saved" money?" "Couple of hundred bucks" "About a thousand maybe" "Are you talking about moneywise?" "I end up using most money in my savings account" "So it doesn't look like where I can use this savings account" "I'm not actually saving anything" "I'm just storing a thing." "I think most people can say that they live paycheck to paycheck" "A good majority of us do" "I'm David Yepsen" "I am political columnist of Des Moines Register" "The most important issue in the campaign is Iraq" "But I think this issue is the most important issue faced the country" "(Okay, stand by please, up on camera 2, go ahead)" "Debt denial." "Some see the nation ignoring a red ink tsunami" "Well question" "The United States Controller General David Walker" "And Concord Coalition public policy executive director Robert Bixby on this issue of Iowa Press." "You talked about the national credit card being run up" "What about the individual credit cards" "Too many Americans are following the bad example of their federal government" "They are spending more money than they make" "They are taking out home equity loans" "They are charging up their credit cards" "They are building up a compound interest and seeing the day that not too distant future" "Where they are not be able to make them that money" "Does that exacerbate the national problem?" "It currently does." "Because for two year in a row" "American households have spend more money than they take home" "A negative saving trade." "The last time when that happened was 1933 and 1934." "Not good years for America." "The war." "Now we were in a very different situation in 1933 and 1934" "But the reasons we have to borrow from foreign players" "Who hold more of our national mortgage" "Who have more leverage on us." "We have less leverage on them." "It's because we are not saving." "And that's gonna change." "I think it's good to take a crises before America response to this." "This is America." "We don't do anything until something reaches a crises." "Or this military rearmament before WW2" "Or this question now." "We are not gonna be willing to take this pain" "Until it gets to be a real problem." "The concepts of sacrificing in building for a better tomorrow." "Have been pushed aside by our live-for today, easy credit, and consumption-oriented society(?" ")" "Many Americans have never seen a rainy day" "And therefore simply choose not to save for one" "This is a major problem because saving is resultant in increased investment" "Additional research development, a stronger economy" "And improvement in our overall standard of living" "Is America's low saving rate today strictly a matter of personal choice" "Or are ther also other forces at play here." "Good morning, Mr. Greenspan" "I understand that you did not take my friendly advice last fall" "I thought maybe you should look for other employment" "But I see you have kept your job." "I'm pleased you're back though" "At least you remember the days of sound money" "In the early 70s, due to the breakdown of the monetary system" "It excited me enough to want to speak out" "The concern the sound money economist has is for the supply of money." "If you increase the supply of money, you have inflation." "I know Wall Street likes it and the economy likes it when the bubble is getting bigger" "But I think it's harmful" "Inflation is very simple" "When government arbitrarily, out of thin air, prints money" "Creates money and credits out of thin air" "When I talk to many teenagers, grade schoolers" "They seem to have no problem comprehending the fact if you just create a lot of money" "It will be like Monopoly Money that won't have value." "Dr. Paul, you are raising an issue which a significant number of people have been raising over the years and for which, frankly, we are not quite sure what the answers are." "Alan Greenspan was the chairman of Federal Reserve Board" "I see the Central Bank, Federal Reserve system have this tremendous power over money and credit" "Greenspan or any chairman of the Federal Reserve is more powerful than even our president" "Because he has so much control over economy" "Many countries have bitten the dust through inflation even in ancient times" "This is a very serious problem" "And the biggest fear will be that if the FED creates too much money" "We are gonna have a crash of the dollar" "For years you have never once been in a target range" "If I set my targets and performed like that as a physician" "My patient would die." "Because the value of your saved dollar can be impacted by the money supply" "Any talk about the savings is incomplete without discuss the FED" "The Federal Reserve is the primary force of determining our nation's money supply" "This is known as monetary policy" "And is should not be confused with what is called fiscal policy" "Which relates to tax and spending policies set by the congress." "The FED's two main policy goals are" "First, to help stimulate economic growth" "Second, try to keep inflation low" "These goals CAN conflict" "When the FED determines that the economy needs stimulus" "Interest rates are lowered, borrowing becomes easier" "And more money flows into the economy" "This is known the opening of FED window" "And the result it an increase of money supply" "When inflation is rising, which means the dollar is quickly losing value" "The FED raises interest rates, borrowing becomes more expensive" "And money eventually flows out of the economy" "This closing of the FED window decreases the money supply" "Severe inflation requires a very tight monetary policy" "Which often leads to increased unemployment" "And greater reliance on personal savings" "In a worst case scenario, the economy can become stagnant" "And inflation can increase." "A situation called "stagflation"" "The FED is then faced with an extremely difficult choice" "Because it can raise the interest rates or lower them at the same time" "It must choose either to stimulate the economy or to fight inflation" "This last happened in the 1970s and it was a very difficult time for our country." "I was in the Nixon's White House." "First as an economic advisor to President Nixon" "And then secretary of Commerce." "I think history record that Federal Reserve was part of the problem." "They let money supply get out of control" "When Paul Volker took over, he realized the need for perfection." "But it's hard for many people to believe" "That interest rates were as I recall at the extraordinary level." "Of 15 - 20 percent annually." "And he had to take truly courageous action and he did." "This before you, "Poor Richard's Almanac", an introduction by Paul A. Volker." "Here I recommend to you, your nearest bookstore." "I think one of the lessons of that period" "Lessons that have to be learned and realized is don't let the inflation get started" "Because once it gets some momentum, it's kind of feeling that it's inevitable" "Or kind of sails back in the days of stagflation" "Unacceptable economic performance, very difficult to deal with" "So little flavor was added to that moment" "All kinds of economic indicators turning south" "New foreclosure stats out today and alike" "Tim, these are the tough times for the president to face the press" "He is hearing it from everybody in his own party, the opposition party" "And from the American people" "Prices are skyrocketing" "And they are asking what the government is gonna do about it" "With respect to the fiscal crisis looming out there in the future" "We'll see whether are the democracy can deal with an obvious problem" "That's gonna be president" "And not too many years" "And the earlier we take actions to deal with it the better" "The Paul Volker of America these days is David Walker, the controller general." "Who is absolutely dedicated to the idea of" "Bringing to the attention to the congress and to the American people." "The fiscal crisis is looming out there." "We've been to twenty-one States so far and District of Columbia" "And we expect to continue this through the 2008 election." "Before I came here I was a high school business education teacher." "I taught for thirty-eight years." "I'm very concerned about the federal debt" "I think probably I'll survive but I'm worried about my son and my grandchildren." "And the burden is going to place on them." "I don't think that deficit reduction is going to be described as a sexy topic" "It is hard to break through with an unsexy message." "Sort of comes across is it's kind of like taking a cold shower" "We come along after the sexy message is" "Cool people off, I guess" "This is about the future of our country, our children and our grandchildren" "And ultimately I'd like to think that politician will rise up above partisan politics" "To do what's right for our country." "All our parents were poor dirt farmers." "And they are all the same, want it better for their kids." "Things will get better for each generation" "My only child is a college graduate" "And I hope my grandchildren all to be college graduates" "But I think it's harder and harder to attain that." "For we, who are the middle-class, and the low-income people." "We need help." "We need help." "Our nation is entering a demographic transformation into an older society" "And we are doing so with rising health care cost and falling national savings." "That's a very bad combination for the future health of economy." "Priorities are totally screwed up in this country" "I know I'm not gonna be around to see the disaster if it doesn't get better" "But my kids, my grandkids are." "It scares me a lot." "In any event the more money you have" "Relative to the amount of goods, the more inflation you have" "And that's not good." "So we are not a free market then" "There's a visible - there's a benevolent hand that touches us." "Absolutely." "You're quite correct." "To the extent that there is a central bank governing the amount of money in the system" "That is not a free market." "Most people call it regulation." "When you lower the interest rates and drive money to the stocks" "The lower the return people get on savings in the bank." "Yes, indeed." "So they've made a choice." "We would like to favor those who invest in the stock market." "Not those who invested in the bank and that helps us." "That's the way it comes out." "That's not the way you should think about it." "This is about Bernanke" "He has to be on that call, forget the investors" "Bernanke needs to open the discount window." "That's how bad things are out there" "Bernanke needs to focus on this" "Alan Greenspan told everybody to take a teaser rate and then raised the rates 17 times" "And Bernanke is being an academic!" "It is no time to be an academic!" "Listen, open the darn FED window" "He has no idea how bad it is out there" "He has no idea, he has no idea." "I have talked to the heads of every single one of these firms in the last 72 hours" "And he has no idea what it's like out there." "None!" "My people have been in this game for 25 years" "And they are losing their jobs, and these firms are gonna go out of businesses" "And he's nuts!" "They are nuts!" "They know nothing!" "Cramer..." "This is a different kind of market" "And the FED is asleep." "There are three types of people in our country." "Those who saved and invest" "Those who could easily save more but choose not to" "And those for whom savings is very difficult." "If Federal Reserve policy creates a strong economic growth and keeps inflation low" "Everyone can benefit" "However, if inflation rises" "People who are less well off will suffer more." "The Federal Reserve seeks solely to get as high a level of real material well-being" "As we can by setting a platform of stability" "We cannot pick and choose amongst various areas of population" "Because we just have no means of doing that" "If fiscal policy is lacks" "Or savings are exceptionally low" "There is nothing monetary policy or any central bank can do about that" "We cannot live in a present only" "Human being cannot survive unless they create provision for the future" "Americans must start saving again" "And they need to invest those savings to help create a better future for themselves" "Their families, and our country." "At the same time, Americans need to know that the money that they are saving" "Will hold its value" "Too much easy credit for too long can create a false sense of wealth" "No one plays a more important role in all of this than the federal reserve." "I think I got it." "I buy something I want, and hope that I can pay for it" "Right?" "No... you make sure you have money, then you buy it." "Oh!" "Then you buy it!" "But shouldn't you buy it before you have the money?" "No..." "Why not?" "It's in the book." "It's only one page long." "The advice is priceless, and the book is free." "I like the sound of that." "Yeah." "We could put it on our credit card." "So, get out of debt now." "Right for your free copy of "Don't buy stuff you cannot afford"." "If you ordered now, you'll also receive "Seriously, if you don't have the money, don't buy it"" "When I say trade deficit, you know what that means?" "Deficit usually means something like... disorder or something?" "Something is wrong with it." "It's not good." "It's money that ... wait a minute" "I have no clue, sorry" "I have no idea" "I think it's something along the lines of if you've borrowed more than you've spend" "Is there trade deficits with other countries maybe?" "So if we have a trade deficit we are importing more than we are exporting" "Okay, there it is" "In 2007, China has the largest trade surplus in the world" "And who is dead last?" "The United States of America" "I've always liked business." "I've always like investments." "I've always like economics" "But I'm a disaster if you ask me, you know, what happens to a split atom" "Or what happens to a cell within the body." "So different people are wired different ways." "A few years ago I wrote an article for "Fortune"" "On sort of the parable of Squanderville Versus Thriftville." "Which was designed to simplify for people problem inherent in persistent large trade imbalances." "Economics tends to put people to sleep and I thought maybe" "By creating a couple of islands with inhabitant's quite widely different activities" "That it might get across the point that otherwise they get lost on." "The thrust is that if you own a lot of property, island in this case" "You can trade it off for the things that you eat, consume every day" "And you can do that for a long time." "But eventually you run out of property and then" "You'll have to work a whole lot harder to provide your own needs" "But also to pay back for the debts you have incurred." "Short-term actions have long-term consequences." "Sometimes people don't think about in the short run." "In the last few decades, but accentuating in the last six to eight years" "This country has started consuming considerably more than it produces." "Because we're so rich, we can do it for a long time" "And we can do it on a large scale, but we can't do it forever." "Eventually you run out." "It's like a credit card." "My credit's pretty good at the moment." "And if I want to go out and quit working and have no income coming in and keep spending, I can," "First of all, sell off the assets I have and then after that," "I can start borrowing on my credit card and I've got a good reputation." "I could do that for quite a while." "But at some point I max out." "And at that point, I have to start producing a whole lot more than I consume" "In order to clean up my debts." "In this country, we have seen imports increase from 5 percent of GDP to, what, 17 percent or so of GDP in the last 35 or so years" "And yet we have 4 1/2 percent unemployment and we have a very, very prosperous country." "So it's a good thing for us." "What is not good is the imbalance between imports and exports." "The rest of the world is buying more and more of our goods." "But at an even greater rate, we're buying more and more of those." "That's not good." "More trade overall is good as long as it's true trade." "If its pseudo trade where we are buying and not selling" "I do not think that's good over time." "If you are buying more than you are selling" "Which is what a trade deficit is" "Eventually your trading partners are going to own a lot of your wealth" "When they are not buying your goods and services with this money" "They will be looking for ways to invest it" "Running large and persistant trade deficits can problematic" "Especially when a country has a low savings rate" "And it's government has to borrow more money every year to pay its bills" "When the federal government needs to borrow money" "Do you know how they do that?" "Don't know." "No, I don't." "I don't know." "That is a very good question." "I'm under the assumption that everyone else borrows money from us, so..." "There's going to be some giant global repo man that's going to come by" "In like 2012 in like disguise." "It's been quite a while." "You're way late." "You have interest piling up." "We're going to take all of your blonde people." "I'm sorry." "More savings out of income are required to finance the growing American economy" "Savings bonds are one of the finest savings investments" "They are safe sound investment for the buyer" "And source of strength for the nation" "The country has asked the people to invest a billion dollars in one month" "To help pay for the war" "The world's free people are united and their determination." "Get those bonds." "You are sure to be the happier for that" "In the past, when we ran large budget deficits" "Our government turned to Americans to borrow that money." "And after World War II, virtually all of the federal debt was owed to Americans." "Today, our high budget deficits" "Our low personal savings rate and large trade deficits" "Have caused us to become increasingly reliant on foreigners" "To finance our debt and provide capital for investment." "There's nothing inherently wrong with this in the short term" "And the truth is America lends money to other countries." "However, as our reliance on foreign lenders increases every year" "One might ask, what are the longer-term consequences?" "Thriftville, ?" "China's probably the biggest global economic story that there is going right now." "It affects everything from big business" "Wall Street, to down home America" "I have a mission" "We wanna make a brand name" "We wanna make a good factory, wanna make some nice products" "Wanna catch up with somebody in front of us." "We know what our future is" "Frankly speaking I never imagined I can own such a line and make such a big building" "People around me get a better living standards" "That's good for me" "The feeling is terrific when every month I give salaries to my workers" "I feel very proud about that" "Chinese people are worried about the same things that are Americans are worried about." "They're worried about their healthcare, they're worried about their retirement." "They are worried about boosting their own income." "What scares a lot of Americans about China's growing prowess" "And the $1 trillion-plus in foreign exchange reserves is a lot of that money" "Invested in U.S. Treasury bonds, in U.S. government debt." "That is keeping U.S. interest rates low and house prices high" "And allowing U.S. economy continue to grow quite well." "A lot of people worry that somehow China is going to all of a suddenly" "Ask for its money back and walk away from the U.S. economy." "You know, one wouldn't exist without the other one" "And I think increasingly the relationship between China and the U.S. is growing tighter" "At least economically." "We are a scrap processing facility." "That means that we buy the material and process it in a form that mills, steel mills, aluminum mills, copper and brass mills, foundries, can consume in their furnaces to produce new metal." "The material goes to China, it goes to Korea, Thailand starting to ship in Vietnam, India, some into Japan." "It's consumed by what would otherwise be a U.S. mill, now that material is going to foreign mills." "We have killed our industrial base." "We have killed or are killing what made us a great nation." "We're giving it to China, to India, to all the other nations of the world to produce our goods and we're a net importer when we should be a net exporter." "The only thing we're net exporting is scrap." "There have been reports that China may indeed start to liquidate some of their treasury holding" "Chinese are the second largest holder of U.S. treasure 9 Trillion dollars outstanding U.S. treasury in total, China holds 40 billion of them." "That's a huge amount of money" "It's so huge, it's called China's nuclear option as you know" "And that refers to financial monopolistic weapon" "If you want to know how it works in Washington" "Basically China gets what it wants" "We've been increasingly dependent on China for our own economic health" "So we are gonna figure out a way to get along with them" "In the fall of 1956" "The world was on the brink of a major international conflict" "America's allies, Britain and France" "Were engaged in a battle against Egypt over control of the Suez Canal" "The Soviet Union was threatening to intervene on the side of Egypt" "America wanted to avoid military action at any cost" "And demanded British and French allies withdraw from the region" "When their request was denied, the U.S. turned to financial warfare" "America, which at that time, own much of England's debt" "Threatened to sell off or dump a significant part of its holdings of British Pound." "So far as going into any kind of military actions under present conditions" "Of course we are not" "This would effectively destroy English currency" "The result:" "All English and French military forces withdrew from Suez Region within weeks." "Some historians considered this the exact moment the British Empire ceased to exist." "It took 42 presidents 242 years to run up a trillion dollars of U.S. debt held abroad." "This president has more than doubled that amount in just six years." "Last year we borrowed 65 percent of all of the money" "That was borrowed in the world by countries, 10 times as much as the next biggest borrower." "That's why this debt is jumping so dramatically" "And it just fundamentally threatens our long-term economic security." "If we don't deal with this" "Our children and grandchildren are going to have a much different life than we have enjoyed." "We'll be in such deep hock to the rest of the world" "We'll be dependent on the kindness of strangers." "We'll be dependent on other countries continuing to loan us vast amounts of money." "If 15 or 20 years from now two percent or three percent of the GDP is being paid abroad" "Merely to service the debts or the ownership of assets that have been incurred" "Because we're over consuming, that will be politically unstable." "We finance these deficits and debt by borrowing money from other countries" "Chinese for example." "What implication does it have for our foreign policy if we are hocked to other governments." "Does that give American president the flexibility to make foreign policy decisions" "Or do we have to worry about what our bankers think." "We have to worry about what our bankers think." "You know when the debt clock was turned off, you know I thought this is, this is gonna get ugly." "because it sends the signal that the problem is solved." "And if we just looking for the long term numbers knew that the problem really wasn't solved" "And frankly we weren't very surprised to see that the debt clock go back on again a few years later." "Just before we leave money matter this evening" "In new York city today, the man who owns the national debt clock has decided to start it again." "It shows that the United States owes more than 66,000 dollars for every American family and that's more than 6 trillion dollars in all" "The signs owner turn it off over almost two years ago and now he says that we need to be reminded that the surplus is gone." "And the deficit spending is back." "Well, my father have many ideas of how to bring out the growing danger of the debt" "At one point, he sent out a card, a new year's card to all people in congress in the city" "Saying happy new year, you owe the Federal government 30,000 dollars." "When we puts this sign up, we moved it around from the corner and we put it up over the entrance of the IRS" "Which we thought was very inappropriate." "The Clinton presidency, the clock we had then could not run backward so we cover it up with the American flag." "This clock will be able to run backwards, hopefully we'll get to the point where we can do that." "We're rapidly approaching 9 trillion dollars, unless we are able to reverse the growing deficit" "Soon we're gonna have to order up a new sign." "As the mother told us when we were growing up" "When you have a little bit extra money, be careful to make sure it does not burn a hole of your whole pocket" "Quite frankly it burned a hole through the pocket, to the floor, and way through the planet." "You know, you need to talk to economists" "I think I got a "B" in economy 101" "I got an "A" ,however, in keeping tax low." "And being fiscally responsible with people's money" "In the battle of Iraq, the United States and her allies have prevailed." "His rather direct way of presenting ideas has stirred up controversy" "Since being sworn in as Treasury secretary on January 20, 2001." "There is no doubt O'Neill has a very difficult job." "President Bush 43 ask me to come back to the government be the secretary of the treasury" "Which I did for 23 month before I got fired for I having a difference of opinion." "For the record the White House saying that treasury secretary Paul O'Neill and top economic adviser Larry Lindsey, tendered their resignations voluntarily." "The vice president said, uh the president decided to make some changes" "And you are one of the changes" "And what we like to do is, I have you come over and meet with the president" "And basically say that you decided to go back to the private sector." "Yeah, for me to say that I've decided to leave the treasury is lie" "I'm not into doing lies, so I was there, I was back to my office latched up my briefcase and went down to the parking space that's reserved for the secretary of the Treasury got in my car and drove back to Pittsburgh." "Well, you know the first way in my life is not be fired before" "I've been promoted to ever higher levels of responsibility" "But you know, it is ok with me" "Uh, because I would have really been uncomfortable arguing for policies I didn't believed in." "I argued during the second half of 2002" "We should not have that tax cut that was not a popular view and in fact it led to a conversation with the vice president where he basically told me that we don't have to worry about deficits, which I got to tell you was really a shock to me." "You know when we, the Bush 43 administration took over" "We have something for 5,maybe 5.6 trillion dollars worth of national debt" "Today I think the number is 8.8 trillion" "That is not an innocent change, that is a monumental change" "In the debt service that we have to do in addition to and on top of all of the other things that our country needs to do." "I think we only need to look at the fate of the other countries who live beyond their means for a long time." "You will inevitably get into trouble." "When you get to understand to the point, you can serve your debt, you're finished." "If you look at what has happened to great republicans in the past they generally have not fallen because of the external threats" "They fallen because of internal threats" "Let's look at Rome as an example which is the longest standing republican in the history of mankind" "The Roman Republic fell for many reasons, but three seem to resonate today" "Declining moral values and political civility at home," "Over confident and over extended militarily around the world" "And fiscal irresponsibility by the central government." "You know, we need to wake up, recognize reality and make sure that we start making tough choices, sooner rather later." "And we are the first republic to stand the test of time" "The purpose of today's hearing is to exam the fraud, waste and abuse." "In the Federal Disaster Systems Programs" "New allegations of massive waste of tax-payer money" "Guy the books are cooked routinely year after year after year." "Disaster systems money was used to purchase items such as a 450 dollar tattoo." "Some of the US Iraqi money that was suppose to help rebuild Iraq." "With instead by a lavish life style for some of the people in charge." "20,000 dollars for resort accommodations in Hawaii" "Estimated 1 billion dollars are fraudulent and improper payments" "According to the some estimates, we cannot track 2.3 trillion dollars in transactions." "13 hundred dollars handgun" "Our cost are passed on directly to tax payer 400-dollar massages" "What do you think you are doing here?" "You don't have any money," "American people don't have any money in this government" "All they have is debt 5000 dollars for a divorce attorney" "This year there will be a deficit in terms of our overall budget spending this year." "200 dollar bottle of Dom Perignon" "Purchased at a restaurants" "And Girls-Gone-Wild videos" "What is this?" "Comedy-central?" "Some people think that we can solve our financial problems by stopping for all waste and abuse." "Or by canceling the Bush tax cuts" "Or by ending the war in Iraq" "The truth is, we can do all three of these things, and we will not come close to solving our nation's fiscal challenges" "Here is how bad our situation really is." "We already have approximately 11,000,000,000,000 dollars total liabilities including public debt" "To this amount, you need to add the current unfunded obligations for social security benefits of about 7 trillion dollars" "Then add Medicare unfunded promises." "34 trillion dollars, of which about 26 trillion relates to Medicare parts A and B" "And about 8 trillion relates to Medicare part D" "The new prescription drug benefit with some claimed would save money in overall Medicare cost." "Add another trillion dollars in Miscellaneous items" "And you get 53 trillion dollars" "Our county will need 53 trillion dollars invest today which is about 175,000 dollars per person" "To deliver on the government obligations and promises." "How much of this 53 trillion dollars do we have?" "Zip." "By the time today's college graduates are ready to retire, 40 years from now" "The only things our government will be able to pay for, are interests on the federal debt" "And some social security, Medicare and Medicaid benefits." "All other parts, the federal government will be closed and out of business." "What about taxes?" "We would have to raise federal tax burns across the board more than two times of today's levels to close the financing gap" "Some politicians complain when any tax increase are mentioned." "We are facing a more than doubling of federal taxes if we continue down our present path." "Remember our debt to GDP?" "By the year 2040, our debt to GDP will be twice at the record level at the end of the World Wall II" "And it skyrockets after that" "Who's going to lend us money then?" "No matter what you personally believe should be done to address our nations deficits" "The magnitude of our problems is much bigger than people understand." "Let's assume for a moment that all earmarks and special interest pork barrel spending were eliminated" "They only represent about 1% of our annual federal spending" "What if all three Bush tax cuts expired in 2010?" "That will only address of about 10% of our Federal Financial Hole." "And what about Iraq?" "Even if the war ended in 2009 the total estimated cost of the war overtime is less than 3% of our total financial problem." "Our budget, savings, trade and leadership deficits individually are bad enough" "But in combination, they create a toxic mix that threats our country's and our family's futures." "As the baby-boomer retire in large numbers, this tidal wave of spending will reach our shores" "We are simply not prepared for it" "And trust me, it can swamp our ship of state." "Unlike many other problems facing our country, this one is ours alone." "We can and we must solve this one." "The question is: when will we?" "As our nation's funders said, it's really up to us, we the people." "Here's the thing about the future, if you knew, that, say, a levy was unsound" "And you knew people were moving in to the area" "And you knew that they were at risk, would you stand by and do nothing?" "And say nothing about it?" "Of course not." "That would be irresponsible, that what we were doing as a nation." "To the future, we know we have this problem, we know the fiscal federal levy is not sound," "We know the structure is not sounds for long term" "And yet we are ushering our future generations" "Saying nothing about it, doing nothing about it" "That's the immoral part of it." "We've been through a lot together, we met challenges and face dangers" "And we know more lie ahead." "We can go forward with confidence, because the state of our union is strong." "I mean you can look at things, 20 or 30 years from now." "And say: this can't happened." "Something will change because the debt is just too big." "There's only one person you has the Bully Pulpit who can take this issue to the people" "That is the president of the United States." "People may think somehow decisions are made by other people far away but it isn't democracy," "That's not really true." "It is your representative in congress or in the sanate that is influencing what happens" "So it's pretty important for people to pay attention to it." "It's actually not that complicated, you know there's an old saying: there's no free lunch." "I think it almost catches the whole thing." "This is for individual and final analysis." "There's no free lunch, no free lunch for a national economy" "We can not afford to pay all these bills, we just pay for these bills by printing money" "It would destroy the currency, and that will be much more painful reaction than just tighten our belts and living within our means" "I do think that piling up more and more and more external debt" "And having the rest of the world own more and more of the United Stated" "May create real political instability down the line" "And increase the possibility the demagogue come along and do some very foolish things." "What these various different deficits are suggesting?" "Is that we are trying to consume more than we produce" "We can do that in the short run, but in the long run, it is of course, impossible" "Without savings, there's no future." "I think that there was tremendous opportunity whoever is the next president to really make a very big and important difference for this country by providing serious leadership on this very difficult salvation." "We need presidents who are so devoted to doing the right things" "With and for the American people, they are prepared to lose for their values." "And hang their values out in the public for everyone to see them" "I have three grand-children, they didn't create this problem" "But it's their problem." "And if policy makers don't stop making the tough choice" "Soon, they are gonna pay the price." "They are gonna bear the burden for the failure of others to act" "And that's not acceptable for me, it's morally wrong." "And it's time that we winded that wrong." "You will remain controller general of the United Stated until mid march, is that right?" "Yes, I love my job as controller general, I love the GAO" "And by working together with my colleague we've made a huge difference in the 9 and half years that I've been here" "At the same point of time, I believe our country is in critical cross roads" "There are practical limits to what I can do as controller general" "I can't advocate pacific policy solutions, I can't be as a aggressively involved in grass-root efforts." "As I think it would be necessary in order to achieve a meaningful and lasting change." "I might say to Mr. Walker, your services has been in the best" "But one would expect that somebody serving a great country, I suspect you find that everybody else would agree." "Thank you so much." "It's been the honor privileged to serve." "Tell us about the Peterson foundation." "Well, I'm gonna be creating the foundation from scratch" "Make a difference for the country." "The mission of the foundation is to get message to millions of the Americans" "That propose sensible and workable solutions to address these challenges" "And the bill public will do something for them" "I' m still gonna be involved in the "fiscal wake up tour"" "You know generals don't leave the fight, but sometimes they change their position on the battlefield and that's exactly what I'm doing here." "The fact is whether it is rain, snow, sleet or dark of the night" "The fiscal wake up tour roads on." "Tonight, David walker says the country's biggest problem is our national debt" "Finally, some good news about Iraq" "David Walker, welcome to the Hot Talk." "We can't afford the promises we have already made." "Please welcome, David Walker" "We gotta reengineer constraint and we gotta engage in a competitive tax reform" "In this way we will promote economic growth but generate bold revenues" "Okay, I didn't understand any of that" "Who is David Walker and why should we care?"