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Presentation by The Honorable David M. Walker: Comptroller General of 
the United States: 

Learning from the Past and Preparing for the Future: 

Speech before Gresham College: 
London, England: 
June 16, 2006: 

United States Government Accountability Office: 


It's wonderful to be in London, one of the world's most important and 
historic cities. In my country, if a building reaches 100 years old, 
it's historic. A 200-year-old building can become an object of 
reverence and often merits its own commemorative plaque. After all, the 
White House, which is one of the oldest structures in my current home 
base of Washington, D.C., only dates to 1799. 

But walk down a street in London and you might find a medieval hall 
like the one here at Gresham College. Or there may be a Christopher 
Wren church or even a wall from Roman times. 

It's heartening to see how you've preserved and honored your past. And 
that brings me to my theme this evening: the need to learn from the 
past and prepare for the future. 

One key lesson of history is that change is inevitable. Britain 
governed much of the world in the 18th and 19th centuries. With good 
reason, Rudyard Kipling called it the empire on which the sun never 

Many historians have termed the 20th century the American Century. And 
it's true that in recent decades, America's economic, military, foreign 
policy, and cultural impact have been felt around the globe. However, I 
would note that America's superpower status has thus far not expanded 
to include the soccer field! 

But it would be foolish to think that America's status as the world's 
only superpower will continue indefinitely. In fact, it's highly likely 
that in the next 20 years we'll see the emergence of one or more 
additional superpowers. The key question is: Which nation or nations 
will join the United States to help define the 21st century? 

The United States has existed as a republic for a little more than 200 
years. In the context of both British and world history, I know that's 
not a long time. Looking back in western history, the Roman Republic 
endured for about 500 years before it finally fell. The American 
experiment in representative government has so far lasted less than 
half that time. God willing, our republic will endure and stand the 
test of time. 

Three reasons for the demise of the Roman Republic seem particularly 
relevant today. The first was a decline in moral values and political 
comity at home. The second was overconfidence and overextension abroad. 
The third was fiscal irresponsibility by the central government. These 
reasons seem all too familiar today. We should learn from them so that 
history doesn't repeat itself. 

History also proves that past foes sometimes turn out to be steadfast 
friends. A vivid example is the changing relationship between our two 
countries. As a history buff and someone with ancestors who fought and 
died during the American Revolution, I find this subject particularly 

The American colonies and England were at war in 1776, and we were at 
war again as recently as 1815. But today, the U.S. and the U.K. are 
strong allies on many issues around the world, whether it's fighting 
terrorism, promoting democracy, helping victims of natural disasters, 
or developing global accounting principles. I can assure you that this 
special relationship between our two nations means a lot to America and 
to Americans. On a personal level, I consider Sir John Bourne, the 
Comptroller and Auditor General of the United Kingdom, to be both a 
professional colleague and a personal friend. 

Unfortunately, in today's world, the lessons of history all too often 
seem to fall on deaf ears. We live in a world consumed with the here 
and now. Far too little thought is given to what's come before or what 
lies ahead. Clearly, this is a risky approach to life and public 
policy. I'm reminded of the famous remark from the philosopher George 
Santayana, who said, "Those who cannot remember the past are condemned 
to repeat it." 

While we can draw valuable lessons from the past, we also need to stay 
alert to current, emerging, and future challenges. The United States 
and many other countries now face a range of trends without 
geopolitical boundaries. These issues include terrorism, globalized 
capital markets, natural disasters, energy and environmental concerns, 
infectious diseases like AIDS and avian flu, and a growing and 
unhealthy gap between the haves and the have-nots. 

Despite these shared trends and challenges, too many countries, 
companies, and individuals today suffer from the dual afflictions of 
myopia, better known as shortsightedness, and tunnel vision. Namely, 

Too many individuals focus on their next paycheck. 

Too many companies focus on the next quarterly earnings report. 

Too many politicians focus on the next election cycle rather than the 
next generation. 

And too many countries focus on their position in the world rather than 
realizing that we are all inhabitants of this planet. 

In the private sector, large multinational corporations are driving 
much of today's global economy. These firms are headquartered in 
various countries, but they tend to have little to no loyalty to any 
particular country. Instead, their main concerns tend to be their 
return on investment, their current stock price, and their executive 
compensation packages. But the truth is that more of these companies 
need to take the long view and consider the broader impact they're 
having on our world, whether it's economic, environmental, societal, or 
cultural. The same can be said for the need for countries to consider 
the longer-term implications of their current policies, programs, and 
proposed actions. 

By considering the long-term implications of current trends and 
proposed policies, we can capitalize on opportunities and reduce the 
risks that lie ahead. Partnering among nations on both a bilateral and 
multilateral basis will be essential. Candidly, many nations, including 
the United States, are facing rough seas ahead. We're going to need to 
start rowing together or else we risk sinking separately. 

Frankly, it's time more of us focused on the word "we" rather than the 
word "me." Because the truth is, with the complicated problems our 
world is facing, nations, institutions, and individuals cannot afford 
to go it alone. We must join forces with others and apply our 
collective expertise to solve shared challenges. 

Governments especially must move beyond long-standing but often 
ineffective ways of doing business. Politicians and civil servants must 
be willing to reach across institutional and geopolitical lines to 
share knowledge and experience. Partnerships can be forged not only 
among various government agencies but with businesses and nonprofit 
groups. This approach can and should be used domestically as well as 

Fortunately, more countries are recognizing the need to partner for 
progress. As never before, Europe is working together and making 
strides on a range of issues of mutual interest and concern. So far, 
we've seen important reforms in areas like public finance, immigration, 
and the capital markets. 

Some of us in America are also trying to partner for progress. For 
example, I shared my views on various current and emerging 
accountability challenges at CIPFA's annual meeting in Harrogate 
yesterday. In addition, one of the reasons I'm in London is to attend a 
briefing on financial management and program planning at your Ministry 
of Defense. Hopefully, we'll be able to use some of these strategies 
back in the states. 

As to the tendency to focus on today, in my country strong economic 
growth, modest inflation levels, relatively low interest rates, and our 
current status as the only superpower have given both policy makers and 
the public a false sense of security about the future. Too many 
Americans have lost sight of very real domestic challenges and the 
obligations that exist beyond our borders. 

For example, in the coming decades, the United States and many other 
industrialized nations will begin to feel the impact of powerful 
demographic trends, including an aging population and slowing workforce 
growth. Among other things, this trend, along with rapid advances in 
medical technology, is fueling an unprecedented rise in health care 

The so-called "baby boom generation"--those born between 1946 and 1964-
-is on the brink of retirement. In just two years, the first "boomers" 
will be eligible for early retirement under the U.S. government's 
social insurance pension system, Social Security. In just five years, 
they will qualify for Medicare, the U.S. government's social insurance 
health care program for retirees. The growing costs associated with 
these social insurance programs could swamp our ship of state unless 
policymakers get serious and begin to undertake meaningful reforms 

On a per capita basis, the United States spends about double what the 
United Kingdom spends on health care. Unfortunately, it's pretty clear 
that we Americans aren't getting a very good return on our health care 
investment. America's health care system is plagued by large gaps in 
coverage, increasing numbers of uninsured people, and below-average 
outcomes on basic measures like medical error rates, infant mortality, 
and life expectancy. At the same time, America is number one in the 
world when it comes to obesity. No one else is even close! 

Health care reform in the United States won't be easy, but it's 
essential. What's needed is greater personal responsibility on the part 
of individuals, more incentives for doctors and patients to make 
prudent choices about medical coverage and treatments, improved 
transparency on the quality and cost of care, and stronger 
accountability for health care plans and providers. 

Today, America now faces not one but four significant deficits. These 
four deficits have serious implications for America's continuing role 
in the world and its standard of living at home. 

The first deficit is our federal budget deficit, which last year 
totaled $318 billion on a cash basis and $760 billion on an accrual 
basis. But the real problem is our government's unfunded commitments 
for social insurance programs. I'm talking here about future Social 
Security and Medicare benefits. Other long-term challenges include 
costly environmental cleanups and potential payouts by entities like 
the federal Flood Insurance Program and the Pension Benefit Guaranty 
Corporation. These items exceeded $46 trillion at the end of fiscal 
year 2005, up from just $20 trillion just five years earlier. 

This translates into a burden of about $375,000 for every full-time 
American worker. It's the equivalent of a $750,000 mortgage for a two- 
income household--without the house! Unfortunately, because of 
continuing deficits, known demographic trends, and compounding interest 
costs, those numbers are rising every second of every minute of every 

The second deficit is our savings deficit. Clearly, many Americans are 
following the bad example set by their government. These individuals 
are living beyond their means and are deeply in debt. In fact, for the 
first time since 1933, Americans last year collectively spent more than 
they earned. Students of history recall that 1933 was not a good year 
for the United States or for the world. In fact, it was the depth of 
the Great Depression! 

Americans' willingness to pile on both personal and public debt is 
particularly alarming in an aging society. Those Americans who fail to 
plan, save, invest well, and preserve their money for retirement are 
putting their future retirement security at risk. 

This brings me to America's third deficit, our overall balance-of- 
payments deficit. The United States simply consumes more than it 
produces. In 2005, the U.S. trade deficit hit a record high of $726 
billion, twice what it was just four years earlier. 

Our "salvation" has been a flood of investment money coming from 
overseas. Thanks to the high savings rate in China, Japan, the United 
Kingdom, OPEC states, and elsewhere, it's been relatively cheap for 
Americans to borrow. The catch is that these foreign investors are 
holding a growing share of my nation's mortgage. Imagine what would 
happen if these foreign investors suddenly curtailed their purchases 
or, worse yet, started to sell their U.S. securities. 

Finally, there's America's fourth deficit, and it may be the most 
serious and sobering of all. Our leadership deficit. Too few elected 
officials have been willing to heed the past, speak the truth about the 
problems ahead, and make hard choices to put our fiscal house in order. 
Instead, my government's continuing lack of fiscal discipline and 
business-as-usual attitude in recent years has made America's long-term 
situation much worse. 

In my view, the first order of business is to restore fiscal 
discipline. Responsible public officials have got to stop digging 
America's fiscal hole deeper. We need to impose meaningful budget 
controls on both the spending and tax sides of the ledger. Members of 
Congress should also have more explicit information on the future costs 
of both spending and tax legislation--before they vote on it. A case in 
point is the new Medicare prescription drug benefit, whose staggering 
long-term costs weren't even considered during the congressional 

It also matters how a nation keeps score. Ironically, America tends to 
be more open and transparent than much of the world when it comes to 
its finances. Even so, the United States needs to further improve its 
federal accounting and reporting model to more clearly convey the long- 
term sustainability of current government programs and policies. This 
new model should also explain the implications for different 
generations of Americans. 

To manage risks and capitalize on opportunities in the 21st century, 
the U.S. government also needs to begin a fundamental review and 
reassessment of all major federal spending programs, tax policies, and 
operational approaches. This is essential for returning America to a 
strong and sustainable fiscal path. 

The fact is that many nations face some degree of long-term fiscal 
risk. For example, a 2005 European Union report warned of unsustainable 
public finances in about half of the European Union member states, 
primarily because of the growing old-age dependency ratio. This is 
where Supreme Audit Institutions (SAI) can help. SAIs are equipped to 
get the facts on the table and provide policymakers with timely, 
reliable, and objective information. 

Over the years, government auditors have earned a reputation for 
independence and professionalism. I believe SAIs can leverage this 
competence and credibility to help address the long-term trends I have 
just described. SAIs are well positioned to "speak truth to power" and 
help governments not just focus on today but plan for tomorrow. 

Most governments have a Supreme Audit Institution. In the case of the 
United States, it's my agency, the Government Accountability Office 
(GAO). In the case of the United Kingdom, it's the National Audit 
Office (NAO). 

SAIs have traditionally been in the oversight business. As government 
watchdogs, SAIs scrutinize how taxpayer dollars are spent and advise 
policymakers on ways to make government work better. This has been and 
probably always will be our primary role. 

But increasingly, SAIs can and should add value by providing public 
officials with insight and foresight into current, emerging, and longer-
term issues. Namely, insight obtained from performance and value-for-
money audits can help determine which government policies and programs 
work and which ones don't. In addition, foresight analyses can help 
elected officials deal with emerging issues before they reach crisis 

Today, SAIs have an opportunity to encourage sound and sustainable 
policy choices. These choices are more likely when policymakers are 
equipped with solid facts and nonpartisan analyses rather than partisan 
political spin. 

In this spirit, GAO has published an unprecedented report called "21st 
Century Challenges" that makes clear that many U.S. government programs 
and policies are based on conditions that existed decades ago. 
Candidly, I doubt the U.S. government is alone in this respect. You can 
find this report and many other GAO products on our Web site at 

Let me give you some examples. The definition of "disability" used in 
most federal assistance programs hasn't been updated since the 1940s. 
Job classification and pay systems for most federal workers are based 
on management and compensation models from the 1950s. The Medicare 
program largely reflects health care insurance designs of the 1960s. 
And some U.S. weapons systems were designed to meet the security 
threats of the Cold War. 

At the same time, government continues to expand, with new projects and 
initiatives added every year. Congress and the White House rarely seem 
to question the wisdom of existing federal activities. As President 
Ronald Reagan once said, "The nearest thing to eternal life we'll ever 
see on this earth is a government program." 

The same goes for many tax policies. For example, just last month, my 
government announced it will stop collecting a 3 percent tax on long- 
distance telephone calls. This doesn't seem particularly startling, 
until you realize the tax had been introduced in 1898 to help pay for 
the Spanish-American War! 

Nothing less than a top-to-bottom review of federal activities is 
needed to determine if they are meeting their objectives. This is true 
for both the spending and the tax sides of the ledger. Congress and the 
President need to decide which policies and programs remain priorities, 
which should be overhauled, and which have simply outlived their 
usefulness. Candidly, other countries need to do this as well. 

America is a rich country. But being rich doesn't mean that we have 
unlimited resources. Even in the wealthiest nations, policymakers have 
to make informed choices among competing, often worthy, alternatives. 
Ultimately, these decisions should be based on what's best for a nation 
and its citizens. And no nation can afford to consistently spend more 
than it takes each in year. Eventually, the bill and its accumulated 
interest costs must be paid. 

Transforming the U.S. government will take a generation or more to 
complete, but the time to start is now. What's at stake are America's 
future economic growth, future standard of living, and future national 
security. Undoubtedly, many other nations could also benefit from 
rethinking what their governments do and how they do business. 

If we expect to successfully tackle issues like health care, 
immigration, education, energy, and the environment, we will need more 
leaders in the United States and around the world with several key 
attributes. These attributes are courage, integrity, creativity, and 
stewardship. By courage, I mean people who state the facts, speak the 
truth, and do the right thing even though it isn't easy or popular. By 
integrity, I mean people who practice what they preach and lead by 
example. We need people who understand that the law and professional 
standards represent the floor of acceptable behavior. It's time all of 
us set our sights higher and do what's right. By creativity, I mean 
people who can think "outside the box" and see new ways to address old 
problems while helping others to see the way forward. Finally, by 
stewardship, I mean people who leave things not just better off but 
better positioned for the future when they depart their jobs and this 

In closing, for more than 400 years, the faculty here at Gresham 
College has been giving free public lectures. I couldn't agree more 
with your mission of sharing knowledge and educating others. As 
Comptroller General of the United States, a father, grandfather, and a 
student of history, I feel the need to speak out about certain 
challenges that face America and our world. I hope that others in my 
country, here in Britain, and elsewhere will also begin to speak up and 
demand that their leaders learn from the past and prepare for the 
future. It's in our collective best interests for them to do so. If we 
do, we can help to ensure that our individual and collective tomorrows 
will be better than today. 

Thank you for your time and attention. 

On the Web: 

Web site: [Hyperlink,]: 


Paul Anderson, Managing Director, Public Affairs,, 
(202) 512-4800, U.S. Government Accountability Office, 441 G Street NW, 
Room 7149, Washington, D.C. 20548: 


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