Watchdog Declaring Deficit Crisis

WASHINGTON, Sept. 17, 2003

(CBS/AP) The head of Congress' investigative arm planned to warn in a speech Thursday that the swelling federal deficit poses a threat to the country's future.

The remarks by David Walker, comptroller general of the General Accounting Office, will place the normally apolitical GAO squarely at the center of a growing debate about federal finances. By some estimates, the deficit could pass $500 billion next year.

"From an overall fiscal perspective, it's time to admit that we're in a fiscal hole, and to stop digging," Walker told United Press International last Friday. "We must begin to come to grips with the dawning fiscal realities that threaten our nation's children's and grandchildren's future."

In an interview with The Los Angeles Times published Wednesday, Walker challenged the Bush administration's contention that economic growth fueled by two major tax cuts in as many years will generate enough revenue to solve the problem.

"We need a wake-up call," Walker told the Times. "We need to come to terms with reality: The gap is too great to grow our way out of the problem. Tough choices will be required."

While Walker's job is to oversee how the government spends it money, his office does not often take such a high-profile stand. The comptroller general's speeches are rarely previewed days in advance by the national press.

The GAO's work usually consists of detailed reports on specific policy questions. The reports released Tuesday bore titles such as: "Airport and Airway Trust Fund: Financial Outlook Is Positive, but the Trust Fund's Balance Would Be Affected If Taxes Were Suspended" and "Depot Maintenance: DOD's 50-50 Reporting Should Be Streamlined."

But Walker has been out front before. In 2002, he sued the Bush administration for refusing to turn over documents on Vice President Dick Cheney's energy task force.

The suit asked the court to require Cheney to reveal who attended the energy tax force meetings, with whom the task force met to develop its recommendations, how it determined whom to invite and how much it cost to develop the policy.

Late last year, a federal judge said the case raised separation of powers issues, and threw it out. Walker did not appeal.

Now, Walker is challenging the administration on the deficit at a time when members of both parties say the record budget gaps are showing signs of evolving into a powerful political issue, fed by voter concern over the size of President Bush's $87 billion request for Iraq.

Until now, voters have paid little attention as four consecutive years of budget surpluses abruptly morphed into shortfalls now expected to soar beyond $400 billion this year and next. Public attention instead has been focused on the economy, wars in Iraq and Afghanistan and the threat of terrorism.

Now, however, people seem to be paying attention. Members of Congress returning home say they are hearing about deficits and Iraq spending from constituents, and recent polls show a growing discontent with Bush's handling of the economy and the budget.

"They're saying, 'You have a half-trillion-dollar deficit and you're asking for another $87 billion?'" said Sen. Sam Brownback, R-Kan. "That's a very high price."

Brownback said he has told White House budget chief Joshua Bolten that the administration needs to publicly discuss specific ideas for reducing deficits. Brownback said he believes the administration will lay out such plans in about a month.

Bolten and other White House officials have said they believe there is little evidence that deficits are harming the economy. They say shortfalls can be halved in five years through economic growth and spending restraint.

Some GOP leaders say they are not concerned that deficits or the Iraq package will deal their party any political blows.

They say Americans understand that a recession and the costs of fighting terrorism forced the return of red ink after the four annual surpluses under President Clinton. Underscoring that, GOP leaders said the House would pass a bill this week increasing charitable deductions for many taxpayers and adding $12.6 billion to deficits over the coming decade.

"When you give people their money back, they grow the economy much better than the government does," said No. 3 House Republican Roy Blunt of Missouri, an author of the bipartisan measure. "The way to move out of the deficit is to grow the economy."