US economic attitudes 'unsustainable'

19 Feb 09
An overhaul of attitudes to fiscal responsibility is needed if the US is to remain the world’s pre-eminent economy, former US comptroller general David Walker has warned

20 February 2009

By Graham Clews

An overhaul of attitudes to fiscal responsibility is needed if the US is to remain the world’s pre-eminent economy, former US comptroller general David Walker has warned.

Walker, who led the Government Accountability Office from 1998 to 2008, said US national debt was currently 75% of gross domestic product, but would rise to 85% by the end of the year, before ‘exploding’.

More than 70% of all new debt was being financed from abroad, mainly Asia, causing problems for ‘national security, foreign policy, and domestic tranquillity’, he said.

‘Our government does not have a strategic planning network stating what we want to do and to assess progress against that,’ Walker added.

‘We are going to have to re-engineer our social insurance and tax programme, because we are on an imprudent and unsustainable path.’

Saving had been replaced by spending in the US, and Americans wanted to ‘have their cake and eat it, multiple times’, he added.

But only pressure from the US population and foreign lenders would persuade the government in Washington to ensure greater economic responsibility.

Walker – whose film, I.O.U.S.A., analysing the US’s financial problems, is on the short list for best documentary at this year’s Oscars – said accountants in the US needed to place greater importance on ‘fiscal responsibility and inter-generational equity’.

He stressed that accountability organisations such as the GAO in the US and the National Audit Office in the UK had a duty to lead by example.

PFfeb2009

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