SMC3 keynote speech addresses U.S. fiscal issues and ways to improve infrastructure

With the United States facing historically high deficit and debt levels, it is not hard to see that these are not issues with lasting negative implications for the economic future of the nation. But there are steps that can be taken to get things at least moving in the right direction, according to David M. Walker, former U.S. comptroller general under Presidents George H.W. Bush and Bill Clinton.

In the keynote speech at the SMC3 Jump Start 2012 conference this week, Walker said spending is a bipartisan problem, which has been out of control since 2002 when the statutory budget controls supported by former President George H.W. Bush expired.

“Bush 41 and Bill Clinton did three things in common,” said Walker. “They supported tough statutory budget controls to constraint federal spending and prevent Congress from making more promises when they had already overpromised, did not expand entitlement benefits which is the most irresponsible thing you can do from a business standpoint, and they broke campaign promises on taxes when they saw they were irresponsible cuts. They both paid political prices to different degrees, but they did the right thing for America.”

In contrast to former President George W. Bush and current President Barack Obama, Walker said Bush 43 and Obama have “struck out” when it comes to fiscal matters, adding that continuing on the status quo economic course is a prescription for disaster.

Walker added that federal revenues have not gone up nearly as fast as spending and pointed out that not all tax cuts stimulate the economy and very few tax cuts generate more gross revenue than otherwise without a tax cut.

“From George Washington to Bill Clinton we accumulated $5.6 trillion in debt, and since then under George W. Bush and Barack Obama the debt is now more than $15 trillion and the U.S. is adding debt at record rates,” he said.  

And one of the results in being in such significant debt has the U.S. ranking 17 out of 34 countries on infrastructure, although Walker pointed out it used to be at the top, whereas now it is in the middle of the pack and losing ground.

Walker cited a report he wrote for the Carnegie Endowment for International Peace a private, nonprofit organization dedicated to advancing cooperation between nations and promoting active international engagement by the United States, with former U.S. Senator Bill Bradley, former Pennsylvania Governor and Homeland Security Secretary Tom Ridge, entitled “Road to Recovery: Transforming America’s Transportation,” as a sort of blueprint for strategies to fund the U.S. transportation system, as well as making transportation more sustainable, improved, and fiscally sound.

“We came together to come up with an innovative approach to rationalize our surface transportation policy, not just for the benefit of surface transportation but to show this is what needs to be done in every major area of government,” explained Walker. “We need a plan that is future-focused, and results-oriented that enhances our economic growth and competitive posture, and is affordable and sustainable over time.”

In describing the report’s highlights, Walker stressed that a real plan is needed to stimulate the economy that does more than re-pave roads. He added that transportation earmarks needs to be banned, as they are not subject to standard planning requirements and are not required to show how benefits outweigh costs and also represent an inefficient use of limited public dollars.

Certain and secure financing for transportation infrastructure funding is also needed, Walker said, at the Highway Trust Fund has been in dire straits over the years and has needed multiple bailouts from the U.S. General Trust Fund to remain solvent.

“What we are proposing is an innovative model that is a combination of an oil fee and a gas tax that [is flexible] so that when oil prices are high gas taxes come down and when oil prices are low gas prices go up,” said Walker. “It is basically setting a target for how much revenue we are trying to get.”

The report added that this type of fee would simultaneously raise needed revenue for transportation infrastructure and exert a countercyclical effect on prices at the pump. And other related benefits this plan could bring, the report said, were decreasing the deficit, reducing U.S. dependence on foreign oil, stabilizing the price of gasoline, supporting long-term economic growth, rebuilding American infrastructure, increasing traffic efficiency, and reducing carbon emissions.