The Government Accounting Office released a report today showing billions of dollars in waste, fraud, and duplication in government programs, click here to download report, complicating the Democrats' attempts to defeat Republican efforts to trim spending in the Federal budget by 60 billion dollars.
The issue could prove critical, not just in the ongoing public debate on how to address our country's huge and increasing national debt, but also due to the potential for a federal government shutdown bandied back and forth between the parties in the event agreement isn't reached on how to address the one trillion-dollar-plus deficit in the fiscal year 2011 budget.
The revelation by the GAO also complicates matters on longer term budgetary matters such as the looming vote to raise the national "debt limit," (which absent drastic budget cuts will be required by May), and longer-term solutions to the nation's fiscal woes caused by burgeoning entitlement programs, (i.e., medicare, social security and medicaid).
Indeed, such programs, if not reformed soon, threaten to exceed all other spending in the federal budget along with interest on the national debt by 2019, (CITE). What does this mean in actuality? Simply this:
Absent real and systemic reform of the entitlement mess Washington has been ignoring for years, there will be a fiscal and economic crisis so great it will make the current economic woes look like a walk in the park, with experts indicating there will be no money left for all other expenditures of the Federal government for things like food and drug safety, energy assistance, border patrol, the federal reserve system, and national defense, (not to mention "lessor" matters like nutrition programs, i.e. food stamps, the postal service, and funding for governmental departments such as the EPA, law enforcement, State Department, and the Internal Revenue Service, well, this latter might not be seen as that much of a loss to millions of Americans, lol);
But all kidding aside, we are talking about a "European-style" meltdown such as we have never seen coming to our shores-- much more serious than that we have observed from afar in Greece and elsewhere-- with such devastating consequence so as to make the 2007/2008 economic/housing crash and ensuing bailouts and related troubles look like the 'good ol days.'
For one thing, we will have to pay a drastically higher percent of interest for any borrowing the Federal government must continue to do for such basic services as listed above, (as a reduction of our credit rating on the international markets will result in rising rates due to us being seen as a more "risky" investment by countries such as China who are at present bankrolling our national spending spree).
Moreover, the drag on our economy that such a crisis and/or increasing levels of debt would cause could not only result in a "depression-era" death spiral which would potentially bring economic growth to a crawl, (if not kill it entirely), the countries continual ability to even borrow at all would be terminal if China and other countries decided to just cease buying our national debt through things like American bonds and T-bills entirely.
While it is an open question whether the Chinese would, in fact, want to take such drastic action, (due to the effect such action could have on their own economy), it conceivably could be precipitated by a financial crisis of their own and therefore, must, in all sobriety, be a factor in our critical and impending national discussion on entitlement and deficit reform.
Indeed, in spite of the White House's lack of clear leadership on these issues, it is plain from the repeated reports and warnings of economists and commissions alike, (click here to see the conclusions from the National Debt Commission instituted by President Obama himself), that this time around it will take much more than just "talk" to solve these critical and imminent problems that have been perculating for decades (and exacerbated by the increase in spending of the current Administration over the last two years).
In that light, the warning from the GAO's report may be the "shot across the bow" of our nation's economic system that could serve as a wake up call to get us back on track. Let's hope the GAO report only adds to the pressure from an increasingly restive electorate so as to result in actual change that will avert the potential negative consequences accruing from our national debt and the resulting crushing burden on future generations that is as morally wrong as it would be economically disastrous. jp
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