GAO head paints bleak budget picture

WASHINGTON -- The federal budget picture is bad and getting worse, the head of the General Accounting Office said Tuesday, and he urged Congress to take a longer-term look at its tax-cut and spending decisions.

"We're not going to grow our way out of this problem," Comptroller General David Walker said in an interview with The Associated Press.

Walker, 51, named by President Clinton in 1998 to a 15-year term as comptroller general and head of the GAO, is a certified public accountant and a former assistant labor secretary.

The GAO is the nonpartisan investigative arm of Congress. Its 3,200 employees handle 25 to 50 requests a week from lawmakers, including reports required by law. The GAO also conducts its own independent investigations of major issues.

With a return to deficits under the Bush administration, the Congressional Budget Office predicts this year's red ink will exceed $300 billion for the first time. The GAO is Congress' investigative arm, while the CBO analyzes spending and tax proposals and makes economic forecasts.

President Bush says tax cuts are needed to spur the stumbling economy. He favors the $550 billion, 10-year tax cut plan passed by the House. The Senate is debating a $350 billion plan over the decade.

In 2001, Congress enacted a 10-year, $1.35 trillion cut.

"Not all spending is prudent, and not all tax cuts stimulate the economy," Walker said.

CBO is required by law to project the impact of spending and tax cut proposals for only 10 years. But Walker said Congress has to look at beyond that period to get the full impact of legislation. For example, while Bush's 2001 tax cuts are scheduled to expire in 2010, congressional forecasters should also look at what would happen if those tax cuts were to continue, Walker said. Bush and some congressional Republicans are pushing to make the tax cuts permanent.

Spending is going up as well, Walker said. As baby boomers age, more people will draw Social Security and receive Medicare and Medicaid benefits. Health care costs for everyone continue to rise; employers get tax breaks for providing health insurance, and their workers don't have to pay taxes on the benefit they receive.

For example, when Congress in 2000 expanded TRICARE, the health care program for military veterans and dependents, the added costs were projected at $50 billion to $60 billion over 10 years. The real cost of the program was closer to $297 billion since many veterans and their families would live longer than a decade, Walker said.

Walker said spending must be matched with 21st-century needs. For example, now that the government has brought electricity to rural areas, perhaps the job of operating the Agriculture Department's Rural Utilities Service could be turned over to the private sector, he said.

In addition, in an era of e-mail, cell phones and Palm Pilots, Walker questioned whether the Postal Service needs as many branches and other facilities as it did when stamped letters were the only way to send written messages from place to place.

It all adds up to this: Without changes, U.S. taxpayers in 2050 will be spending more money to pay interest on the national debt than on everything else the government does -- from defense to transportation -- except for Social Security, Medicaid and Medicare, according to GAO projections.

"I don't think we can allow this to happen. For it not to happen, tough choices will be required," Walker said.

In the AP interview, Walker also said:

--The agency will look at the costs of the Iraq war and its aftermath, as well as rebuilding contracts awarded to private companies. Vice President Dick Cheney's former company, Halliburton Co., has a no-bid contract in Iraq worth at least $77 million.

--U.S. District Judge John Bates, a Bush appointee, was "clearly wrong" in ruling against the GAO's lawsuit for the people who met with the Cheney energy task force. The GAO went to court when the White House refused to release the names, saying the public had a right to know whom the Bush administration consulted in drafting its energy plan and whether Congress needed to talk to other interested parties. Walker said he didn't challenge Bates' decision because the ruling would not stop the agency from seeking other White House records, but a failed appeal could hinder future investigations.

--GAO's name should be changed to the Government Accountability Office. Walker said traditional financial management accounted for just 15 percent of the GAO's work. "We're really in the performance and accountability business," he said.

A bill to make the change is being drafted, Walker said.

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On the Net: General Accounting Office: http://www.gao.gov