The former U.S. comptroller general lays out the facts for a country that is coming to terms with a gap between its ambitions and its checkbook. Excerpt from “Correcting America’s Fiscal Imbalances,” June 6, 2012.

DAVID WALKER, Founder, President and CEO, Comeback America Initiative; Author, Comeback America

This country was founded, among other things, upon limited but effective government. Individual liberty and opportunity. Personal responsibility and accountability. Rule of law and equal justice under the law. Fiscal responsibility and intergenerational equity. And let me give you a word that we don’t hear enough, and the word is stewardship. That word means that as a leader, whether you’re in the private sector, the public sector, the not-for-profit sector – and I’ve had the good fortune of being a leader in all three – your job is not just to generate positive results today, not just to leave things better off when you leave than when you came, but to leave things better positioned for the future. That is much tougher, and the truth is my generation, the Baby Boom generation, is failing on its stewardship responsibility to our children and grandchildren. Our fiscal policy, which is tax and spending, is imprudent and unsustainable, but we face a number of other key sustainability challenges that we have to address: our energy policy, our environmental policy, our infrastructure policy, our immigration policy, our health-care policy, our tax policy. I could go on and on, but I’ve got a limited amount of time. The current path we’re on in all these areas is imprudent and unsustainable. We are the largest economy on Earth; we’re the temporary sole superpower; our currency, the U.S. dollar, represents over 60 percent of the world’s global reserve currency; and we issue debt in our own currency. All of these things mean that we’re a powerful nation, our culture is felt around the world, but we’re not learning from history and we’re not learning from others. Other great civilizations and great powers have strayed from their principles and values and paid a price. We need to not follow their mistakes.

At the federal level, the government has grown too big, promised too much and waited too long to restructure, but it’s not too late. Let me give you some stats. In 1900, the federal government was less than 3 percent of the economy. This year, it’s over 24 percent of the economy, so it’s eight times bigger relative to the size of our economy than in 1900. It’s scheduled to be 37 percent of the U.S. economy by 2040 on our current path. If you add state and local government, government would be over 50 percent of the U.S. economy in 2040, which sounds like a long way off, but, believe me, it’s not; think about your kids and your grandkids.

I’m not an anti-government person. Some of the brightest, most dedicated and capable people I’ve ever worked with are civil servants. I’ve run two agencies in the executive branch, one in the legislative branch; I’ve been a trustee of Social Security and Medicare. The fact is that they’re capable people trapped in a bad system. The truth is, government is not the engine of growth, innovation and job creation, and you cannot allow government to get that big and expect to maintain your competitive posture, economic growth and opportunity. So we must change course. The same is true at the state and local level. By the way, you’ve all heard the saying, “Bad news flows downhill”? When the federal government has to restructure its finances, it will have a ripple effect down to state and local governments. Today, most states rely upon the federal government for one-third to 42 percent of their revenues, and they’re assuming they’re going to continue to receive that! That is not a reasonable assumption. The most likely scenario is that in order to put the federal government’s finances in order, it’s going to have to significantly reduce future projected spending, and it’s going to have to raise more revenues. That means it’s going to do less than people are expecting, and people are going to have to pay more taxes than they’re accustomed to paying. That means the states and localities will get less, will have to finance more of their own, and that also means that individuals will have to assume more responsibility for their own financial future: plan, save, invest and preserve.

I’ve been to 49 states during town hall meetings, to business community leaders, editorial boards, local media. The people are ahead of the politicians. They know we have a problem. They’ve adjusted their behavior, but government hasn’t adjusted its behavior. Believe it or not, I’m 60 years old, and do you know how many times in 60 years Congress has passed a budget and appropriations bills on time? Four times in 60 years. And even when they pass a budget, they only control 37 percent of spending, and the rest is on autopilot; a blank check has been written.

Could you run your family, could you run a business, could I run my nonprofit having a budget that only controls 37 percent of spending? No. How can we run the largest entity on the face of the earth that way, the United States government? By the way, at the state level, believe it or not, including your state – your state counts proceeds from borrowing as revenue to balance the budget. Now that’s pretty creative accounting. At least the federal government doesn’t do that.

The good news is there is a way forward: the Simpson-Bowles Commission, the Domenici-Rivlin Commission, the Comeback America Initiative – the entity that I had, our Restoring Fiscal Sanity Report. There are a number of frameworks for reform out there that should be able to get broad-based, bipartisan support, that end up separating the short-term challenge from the structural, that recognize that everything has to be on the table, that we have to regain control of the budget. We have to reform Social Security, Medicare and Medicaid while maintaining a strong and secure safety net. We have to cut defense and constrain defense spending without compromising national security. We have to separate the wheat from the chaff between which federal government spending programs and tax policies and regulatory actions are working and aren’t working, which ones are based on the past and which ones are trying to create a better future. We have to comprehensively reform our tax system to make it simpler, fairer, more competitive and more equitable and to generate adequate revenue to pay our bills and deliver on the promises we intend to keep.

In my view, any comprehensive reform plan has to be successful and sustainable. First, it’s got to make economic sense: pro-growth. Secondly, it’s got to be socially equitable. We need a solvent, sustainable and secure social safety net in this country. Thirdly, it’s got to be culturally acceptable. It’s got to envision a size of government and a level of taxation that will be supported by a majority of the American people. The size of government is not based upon how much it taxes; the size of government is based on how much it spends, and the difference between what you spend and what you get in revenues is called a deficit, which results in debt, and that represents deferred taxation that our children, grandchildren and generations unborn will have to pay absent us changing our course.

We’re number 28 out of 34 in the world in fiscal responsibility and sustainability. Greece is 34; Australia’s number 1; Mexico’s 18 – we’re 28! Which way are they going on the border this week? If you look at health care, we spend double per person on health care, and we get below average societal outcomes. K-12 education: We spend double per person, and we get below average results. If you think you’re going to solve your problem by throwing more money at a system that you’re already spending double per person and getting below average results, that ain’t going to work. We’re going to have to transform it, focusing on incentives, transparency and accountability.