The Comptroller Who Roared

BF: There seems to be something of a sea change in Washington, with fiscal responsibility finally being put on the front burner. What happened?

DW: Americans have seen that the too-big-to-fail concept is fundamentally flawed. Within the past 18 months, they've seen venerable financial, insurance, and manufacturing companies either go out of business or require a government bailout. They now know that the federal government has been following many of these same imprudent practices for years and that you can't spend more money than you make and take on increasing debt loads forever without potentially facing a crisis. So they have modified their behavior by moderating their spending and by increasing their savings rate, and they now expect the federal government to do the same so that we can avoid a super subprime crisis that would result in a much worse impact on the economy and American families than the mortgage rate and subprime crisis. We have also seen this manifested in recent public opinion polls.

BF: And some would argue the Massachusetts senatorial election.

DW: Massachusetts, in my view, was not a victory for Republicans. It was a rise of independence. It was an expression of increasing frustration with the status quo and the normal way of doing business with incumbents. Republicans had better not overestimate the messages coming from Massachusetts. And Democrats had better pay darned close attention to the messages coming from Massachusetts because the public is increasingly concerned and a small but growing percentage of them are becoming angry. We must put this to a constructive purpose to help create a better future rather than allow it to spin out of control.

BF: You talk about the need to establish a government fiscal commission in Comeback America, your latest book, and in fact the Obama Administration has clearly embraced the notion of one. Are you encouraged by some of the new directives coming from the White House?

DW: Well, yes ... the president has already announced that he will form a presidential fiscal commission. He has also announced that he's proposing to freeze a portion of discretionary spending for three years and support a modified pay-go rule. I think that these are steps in the right direction, and I believe that the fiscal commission is of critical importance. I think that he needs to announce what the purpose of the commission is, and I think he needs to do it within the next 30 days.

BF: The proposed commission's long-term goal is for the deficit to reach 3 percent of GDP. That's down from a high this year of 10.6 percent.

DW: In my view, we need to look out several decades. We need to try to stabilize debt to GDP at an appropriate level. We need to achieve a significant reduction in the tens of trillions in unfunded obligations that we have. Now, it's fine to have an interim goal, but we must look beyond the 10-year horizon and to our off-balance-sheet obligations.

BF: The president's budget philosophy is now rooted in pay-go principles, which you have also advocated. What other operating principles are required?

DW: Pay-as-you-go is one of a number of concepts that we need to embrace. The current pay-as-you-go proposal has a number of large loopholes in it that ultimately need to be addressed by the fiscal commission, but in addition to pay-go rules, we need statutory discretionary spending caps and automatic reconsideration triggers when certain mandatory spending programs and tax preferences reach a stated size of the budget or economy.

BF: You have emphasized that the fiscal commission should be a bipartisan committee -- who should be on this?

DW: We don't know what the president has in mind yet. In my opinion, it should include some members of Congress and the administration as well as a number of nongovernment members. It's critical that all members meet three criteria. Namely, they need to be capable, credible, and committed to making a number of nonpartisan and nonideological recommendations that can achieve bipartisan support.

BF: Are you a candidate for this commission?

DW: I don't know -- that's up to the president. He needs to decide how it should be composed. My view is that he needs to have independents involved because a growing plurality of Americans are independents like me, and that's why I say that we need nonpartisan and nonideological solutions that can achieve bipartisan support.

BF: One would think that you have an advantage, having been comptroller general of the United States and Public Trustee of Social Security and Medicare.

DW: I've also been to 46 states in the last four years doing town hall meetings with business community leaders, editorial boards, and local media (as I'm doing in Philadelphia today). I have a very good sense of what the American people want. The American people are in the sensible center -- they want results. The current system in Washington not only has partisan battles but also has a huge ideological divide that in effect represents a huge obstacle to achieving solutions. Therefore, we must employ alternative means and mechanisms to get the job done. I knew that the timing of my book would be good, but it turns out that it's great. What I've always tried to do in my job is to always look ahead. There are not enough people looking ahead, and that's why Washington tends to be a lag indicator. And Congress is a lag indicator within Washington. That's why we always tend to be in a crisis management atmosphere. Yet if you look at a lot of trends and challenges, you can anticipate problems, and that's what we need to be doing more of. We need to be taking steps to try to capitalize on the opportunities to mitigate the risk and avoid crisis.