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Bush Administration "the Least Fiscally Responsible in History," Budget Hawk Says
Posted Mar 31, 2010 07:30am EDT by Aaron Task in Newsmakers, Recession
Related: ^DJI, ^GSPC, TBT, TLT, TIP, UUP, XLF
With the U.S. facing annual deficits of $1 trillion (or more) for the next decade, the recent sell-off in the bond market could be cause for alarm. Are foreigners finally calling Ben Bernanke's bluff? Is America the 'new Greece'? Have the deficit chickens finally come home to roost?

"Only time will tell," says David Walker, President and CEO of the Peter G. Peterson Foundation, which is devoted to promoting fiscal responsibility.

A longtime deficit hawk, Walker says a distinction must be made between short- and long-term deficits. The former is largely caused by the recession and will likely prove temporary, says the former U.S. Comptroller General and head of the Government Accountability Office.

"What threatens our future are the deficits that will exist when the economy is recovered, when unemployment is down, when wars are over and the crises are passed," Walker says. "That's what threatens the ship of state."

Specifically, Walker cites the $50 trillion in unfunded liabilities -- mostly for Social Security, Medicare and Medicaid -- which make up the bulk of America's roughly $62 trillion in long-term debt.

The hole is so gargantuan we cannot grow or inflate our way out, says Walker. He offers the following prescription, as detailed in a new book Comeback America:

-- Re-impose tough budget controls
-- Reform social insurance programs
-- Constrain spending
-- Reform the tax system in ways to raise revenue
As to which party or President is responsible for our predicament, Walker says there's "equal opportunity for critique."

The George W. Bush administration "arguably was the least fiscally responsible in history," Walker says, based on the swing in the federal budget from a $230 billion surplus in 2000 to a $1.2 trillion deficit in 2008.

"But the jury is out on the current administration," he says. "The numbers are shocking. Ultimately [Obama's] responsible now. He's got to come to grips with 'what are we going to do?' on his watch. We'll have to see what ends up happening."