Summary

This speech was given by the Comptroller General before Gresham College in London, England on June 16, 2006. The United States has existed as a republic for a little more than 200 years. In the context of both British and world history, I know that's not a long time. Looking back in western history, the Roman Republic endured for about 500 years before it finally fell. The American experiment in representative government has so far lasted less than half that time. God willing, our republic will endure and stand the test of time. Three reasons for the demise of the Roman Republic seem particularly relevant today. The first was a decline in moral values and political comity at home. The second was overconfidence and overextension abroad. The third was fiscal irresponsibility by the central government. These reasons seem all too familiar today. We should learn from them so that history doesn't repeat itself. Unfortunately, in today's world, the lessons of history all too often seem to fall on deaf ears. We live in a world consumed with the here and now. Far too little thought is given to what's come before or what lies ahead. Clearly, this is a risky approach to life and public policy. While we can draw valuable lessons from the past, we also need to stay alert to current, emerging, and future challenges. The United States and many other countries now face a range of trends without geopolitical boundaries. These issues include terrorism, globalized capital markets, natural disasters, energy and environmental concerns, infectious diseases like AIDS and avian flu, and a growing and unhealthy gap between the haves and the have-nots. Despite these shared trends and challenges, too many countries, companies, and individuals today suffer from the dual afflictions of myopia, better known as shortsightedness, and tunnel vision. By considering the long-term implications of current trends and proposed policies, we can capitalize on opportunities and reduce the risks that lie ahead. Partnering among nations on both a bilateral and multilateral basis will be essential. Candidly, many nations, including the United States, are facing rough seas ahead. We're going to need to start rowing together or else we risk sinking separately. Today, America now faces not one but four significant deficits. These four deficits have serious implications for America's continuing role in the world and its standard of living at home. The first deficit is our federal budget deficit, which last year totaled $318 billion on a cash basis and $760 billion on an accrual basis. But the real problem is our government's unfunded commitments for social insurance programs. I'm talking here about future Social Security and Medicare benefits. The second deficit is our savings deficit. Clearly, many Americans are following the bad example set by their government. These individuals are living beyond their means and are deeply in debt. This brings me to America's third deficit, our overall balance-of-payments deficit. The United States simply consumes more than it produces. In 2005, the U.S. trade deficit hit a record high of $726 billion, twice what it was just four years earlier. Finally, there's America's fourth deficit, and it may be the most serious and sobering of all. Our leadership deficit. Too few elected officials have been willing to heed the past, speak the truth about the problems ahead, and make hard choices to put our fiscal house in order.

The budget deficit translates into a burden of about $375,000 for every full-time American worker. Unfortunately, because of continuing deficits, known demographic trends, and compounding interest costs, those numbers are rising every second of every minute of every day. For the first time since 1933, Americans last year collectively spent more than they earned. Americans' willingness to pile on both personal and public debt is particularly alarming in an aging society. Those Americans who fail to plan, save, invest well, and preserve their money for retirement are putting their future retirement security at risk. Our "salvation" has been a flood of investment money coming from overseas. Thanks to the high savings rate in China, Japan, the United Kingdom, OPEC states, and elsewhere, it's been relatively cheap for Americans to borrow. The catch is that these foreign investors are holding a growing share of my nation's mortgage. Imagine what would happen if these foreign investors suddenly curtailed their purchases or, worse yet, started to sell their U.S. securities. In my view, the first order of business is to restore fiscal discipline. Responsible public officials have got to stop digging America's fiscal hole deeper. We need to impose meaningful budget controls on both the spending and tax sides of the ledger. Members of Congress should also have more explicit information on the future costs of both spending and tax legislation--before they vote on it. The United States needs to further improve its federal accounting and reporting model to more clearly convey the long-term sustainability of current government programs and policies. This new model should also explain the implications for different generations of Americans. To manage risks and capitalize on opportunities in the 21st century, the U.S. government also needs to begin a fundamental review and reassessment of all major federal spending programs, tax policies, and operational approaches. This is essential for returning America to a strong and sustainable fiscal path. The fact is that many nations face some degree of long-term fiscal risk. For example, a 2005 European Union report warned of unsustainable public finances in about half of the European Union member states, primarily because of the growing old-age dependency ratio. This is where Supreme Audit Institutions (SAI) can help. SAIs are equipped to get the facts on the table and provide policymakers with timely, reliable, and objective information. Over the years, government auditors have earned a reputation for independence and professionalism. I believe SAIs can leverage this competence and credibility to help address the long-term trends I have just described. SAIs are well positioned to "speak truth to power" and help governments not just focus on today but plan for tomorrow. SAIs have traditionally been in the oversight business. As government watchdogs, SAIs scrutinize how taxpayer dollars are spent and advise policymakers on ways to make government work better. This has been and probably always will be our primary role. But increasingly, SAIs can and should add value by providing public officials with insight and foresight into current, emerging, and longer-term issues. Namely, insight obtained from performance and value-for-money audits can help determine which government policies and programs work and which ones don't. Nothing less than a top-to-bottom review of federal activities is needed to determine if they are meeting their objectives. Transforming the U.S. government will take a generation or more to complete, but the time to start is now. What's at stake are America's future economic growth, future standard of living, and future national security. Undoubtedly, many other nations could also benefit from rethinking what their governments do and how they do business.