OCTOBER 31, 2005 -- U.S. Comptroller General David Walker said Monday the nation can't afford the new Medicare prescription drug benefit.
"We were already in the hole 15 to 20 trillion dollars before Medicare Part D [the drug benefit] was enacted and that's just for Medicare," said Walker, head of the Government Accountability Office. "And we added another eight" trillion for the benefit. "If that's not imprudent, I don't know what is."
Walker's figures referred to GAO's analysis of the 75-year fiscal outlook for Medicare, which compares promised benefits to existing revenue sources.
Walker delivered his remarks at a forum sponsored by the left-leaning Brookings Institution, the right-leaning Heritage Foundation, and the National Press Foundation. They came at the start of a week in which Sen. John McCain, R-Ariz., and other lawmakers are expected to offer amendments to budget legislation that would delay the benefit from opening to enrollment as planned on Nov. 15. Walker's comments may provide high-profile support for the lawmakers' position. But the Bush administration and GOP congressional leaders have said they do not favor a delay.
Walker portrayed his comments as an assessment of the nation's budget outlook rather than specific policy prescriptions. But after remarks depicting Medicare as a far greater part of the nation's long-term fiscal crisis than Social Security, Walker cited the drug benefit as an example of the country moving in the wrong direction.
Asked during a question and answer period whether the benefit should be delayed, Walker said "that's a policy decision. Let's just say that we couldn't afford Part D of Medicare," which Congress passed in 2003 as part of the Medicare overhaul law (PL 108-173).
"It's one thing to say we need some type of prescription drug program. That's valid," he said. "But we need to do that as part of a restructuring of the entire Medicare system and not a layering on of a program that was started in 1965."
Walker did not specifically address other changes in the 2003 law giving a broader role for private plans, but it was clear from his remarks that he believes far greater changes are needed.
His remarks could be construed as favoring a system in which the federal government makes fixed monetary contributions for the care of Medicare beneficiaries, but does not mandate delivery of a fixed package of benefits regardless of cost. Walker did not specifically say he was endorsing "defined contribution" reforms, however.
Walker has called numerous times for controls on Medicare and Medicaid spending, but in a general way. He gave unusual emphasis to the drug benefit Monday. The benefit by itself adds more than twice as much to the nation's projected long-term deficit than does Social Security, he said.
Walker said the Medicare program overall contributes to the long-term fiscal deficit eight times more than Social Security.
But Walker hammered hard at health care costs in general at the forum, which Brookings Economic Studies Director Isabel Sawhill said followed a number of recent events with the Heritage Foundation she described as a "fiscal wake-up tour."
"There is a lot of agreement now on what the nature of the problem is, and the problem is very serious," Sawhill said. "Our elected officials unfortunately are not dealing with this effectively."
Illustrating the impact of unrevised entitlement spending on the nation's future finances, Walker said that if all tax cuts were made permanent and discretionary spending were to grow at the rate of the economy, all federal spending could go to pay interest on the federal debt in the years after 2040. "If all we try to do is try to deficit-finance our way out of this, the government could be doing nothing more than paying interest on the large accumulated debt by the time you get out a little while beyond 2040," he said.
"We're going to have to reform not just Medicare and Medicaid, we're going to have to reform the entire health care system," he said. Federal tax policy does not count health benefits as income, fueling the spending problem, he said.
Walker said among the "deficits" the nation faces is "a leadership deficit." He urged adoption of "pay-as-you-go" rules to make sure legislation is funded, and said "we need more automatic triggers that will force reconsideration of certain programs," referring to entitlement programs.
Walker said that the revenue side of government spending also needed to be reconsidered. "We can't afford to make all the tax cuts permanent," he said. "When you're trying to deal with the bottom line, you can't just exempt one side of the budget. You need to consider both the spending side and the revenue side if you're trying to balance the books and make sure that the government can pay its bills today and deliver on its future promises."