Washington Failing in Fiscal Control: Ex-Comptroller

The American public believes that Washington is failing on fiscal responsibility, David Walker, former U.S. comptroller general told CNBC on Wednesday.

“Our latest statistically valid public research says that 80 percent of Americans are concerned about escalating deficits and debt, No. 2 only to the current economy and their job, way ahead of health care reform, way ahead of climate change, way ahead of other issues including security,” he said.  “They think that Congress is broken.”

Eye on America's Purse Strings

Walker left the government last year to become head of the Peterson Foundation, founded by Blackstone Group co-founder Peter G. Peterson, a philanthropic organization that is a frequent critic of federal deficits, entitlement programs and taxes.

While 2009 was about short-term issues like the recession, financial services, housing and health care, Walker said, 2010 needs to be dealing with long-term structural challenges.

“I’m not as concerned about the short term deficits and the related debt as I am the structural,” he said. “The structural, or the ice that’s below the water, for an ice boat is what threatens the ship of state.”

The latest health care legislation is not about reform, he said, but rather, coverage expansion. While the health care plan will likely pay for itself over the first ten years, he said, it remains “highly” questionable whether it will pay for itself beyond that.

“The fact is that it does virtually nothing to significantly reduce the tens of trillions of unfunded obligations that we have for Medicare,” he said. “It results in higher health care costs as a percentage of GDP if it passes then doing nothing.”

Health care reform would have to pass four tests in order to be responsible, said Walker: (1) pay for itself over ten years, (2) not add to deficits beyond ten years, (3) result in a significant reduction in the tens of trillions of unfunded current obligations, and (4) result in total health care cost as a percentage of the economy that’s less after the reform.

“None of the bills meet that,” he said. “What we’re doing here is adding a new wing onto a health care house that is structurally unsound and mortgaged for more than it’s worth. And we’re calling it victory.”