Former U.S. Comptroller General David Walker joins Coach Pete D’Arruda to discuss America’s debt, the pressures facing Social Security and Medicare, and why fiscal decisions in Washington matter to families preparing for retirement. They explore Walker’s proposals for reform, his concerns for future generations, and the importance of getting your own financial house in order. The conversation also touches on Roth conversions, taxes, and planning ahead instead of waiting for a crisis.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Consumer advocate Thomas Lipscomb here with you alongside America's wealth, financial, and income coach, best-selling author, Coach Pete D’Arruda. Excited for the show today. Coach, you always have such special guests that come on the program, no less this weekend as well. Well, it's been about 20 years since I've known David, and we're having David Walker, folks, former U.S. Comptroller General, and over with both different parties, so it's not like one party. And I remember, David, we saw each other in 2012 when you were in Chapel Hill, North Carolina. You were on your 10 million a minute bus tour. Remember that day? I remember. It ain't worse now. I know. I was telling Thomas and my daughter Carrie, who's my summer intern here, I told those guys, I said, I'm going to talk about it being 10 million a minute, and David's going to get mad about that.

00:45 Now, what is it now, you think, David? It's over 10. I haven't calculated. Let's put it this way. You know, back then, our total liabilities and unfunded obligations were $70 trillion. Now, they're $136 trillion plus and going up rapidly. And so, you know, we've lost control. There's just absolutely no question. You know, when do you think, because Congress, both sides, they meet, you know, they meet all the time, and who knows what they do up there, but they never accomplish what they're supposed to. They kick this can down the road. They can't even agree on a spending bill anymore. We keep having these government shutdowns. How are they ever going to agree to pay this debt? Well, first, Congress is very good at doing nothing. And that's okay when things are going well. But when things aren't going well and they're getting worse with the passage of time, it's

01:34 not acceptable. And it's a bipartisan problem. It is. You know, whether the Democrats are in charge or Republicans, they've both been kicking the can down the road. You know, there's only one thing in the Constitution that Congress is supposed to do every year, only one. And that's passed all the appropriations bills on time. The last time they did it was 96. They've only done it four times in my lifetime. That's an F minus. So look, here's what it's going to take, Pete. You know, it's going to take a statutory, meaning by law, fiscal commission that will educate, engage the American people on the facts, the truth, the tough choices, solicit input, make a package of recommendations for up or down vote in Congress. And secondly, a constitutional amendment that limits how much debt we can take on as a percentage

02:23 of the economy, absent limited and extraordinary conditions. A constitutional amendment is the only thing that will force the Congress to restore and sustain fiscal sanity. They're not going to, I mean, why would they do that? I mean, I can't even get folks a lot of times to pay attention to the fact that a Roth IRA is a great place. You pay the taxes now, you put the money away, you never have to worry about taxes again. People don't want to even think about spending or paying money right now. And same thing with Congress. It seems like they, you know, they can't get enough traction. I mean, you tried very hard there in 2012 to get attention. How far up did we get in the polls as far as people being aware of the debt and wanting to get something done? Do you remember? Well, first, I have done Roth transfers last year and this year. Okay. So I believe in leading by example. Yes. Secondly, people are getting more concerned about it.

03:11 And it's not just Main Street America. It's our investors. We're starting to have a supply and demand imbalance. We need to issue a lot more debt and the appetite for our debt is going down. China has significantly reduced its debt holdings. Other countries are becoming reticent about buying as much of our debt as they have historically. You know, we're having to pay higher interest rates in order to be able to finance our deficits. The second largest expense is interest. The fastest growing expense is interest. And what do you get for interest? Nothing. And so things are changing. I'm about ready to go back on the road again in late 26 and 27 because while these issues won't be a top priority for the midterms, they will be for the 28 election.

03:58 And I've got a new book coming out this fall that hopefully will be a basis to be able to get people much more informed and engaged. Do you have a title for the book yet? Yes. Saving Social Security in America. Common Sense Solutions. What do you think of the top two or three solutions people can push their congressmen or woman to do now? Well, you know, we need that commission. There are bipartisan bills in both the House and the Senate that hopefully can get moved to the lame duck session. Nothing's going to happen before the midterms. Congress is not going to pass a constitutional amendment. And so we need to go with Plan B. Plan B is what the founders envisioned. The states need to get together, propose an amendment. But Congress should have called a state-led convention as far back as 79.

04:44 They didn't do it. They're stiff in the states. And now I'm trying to get a state attorney general to sue the Congress for failing to call the convention. I think these are very two significant things that are either going to happen or not happen in calendar 2026. And so let's hope that they do. You know, Social Security, the trust fund goes to zero in 2032. That's an action-enforcing event. And that's why I say that while it's not going to be a big issue in this year's midterms, it will be in 2028. We need to start telling the ground on it, turning the heat up. It's right when I was supposed to start getting Social Security in 67. I hear you, my friend. By the way, the 67 is probably going to go up one month a year over 24 years.

05:31 Wow. Yeah. Well, I mean, you can't afford to pay us. We're living longer. And we don't have that money there. It's not there. So the Roth IRA, it makes a lot of sense now because at least we know where the tax rates are now. And if we put it in a place that the government supposedly can't touch, I mean, how confident are you that they won't try to change those rules going down the road? Well, your grandfather, okay, even if they try to change the rules going, they're not going to do it retroactively. And I do think that the individual income tax rates are as low as they're ever going to be. And while the problem to be able to put our finances in order are primarily a spending problem, we're going to have to have more revenues. And the single largest source of revenue is individual income taxes. That's not the one I want them to get revenue from. I understand that.

06:17 Yeah, that was raising tax rates. Folks, we're talking to former U.S. Comptroller General Mr. David Walker joining us on the show today. David, it's just frustrating when we all can see this, but it doesn't seem like Congress really cares. Well, the biggest deficit that we have, Pete, is a leadership deficit. You know, we have too many laggards, not enough leaders, too many people living for today rather than help create a better tomorrow. You know, the sad thing is, is for the first 200 years roughly of our republic, we believed in the concept of stewardship, which is not just generating positive results today, not just leaving things better off when you leave them when they came, but leaving things better positioned for the future. We've abandoned that.

07:29 People in it. And it's called Grow It or Blow It. Grow It or Blow It. And it's about, like, people you remember in the past, like the Commodore Vanderbilt, all the famous people, the big millionaires and billionaires who made the money. And within three generations, many of their fortunes they left was gone because the grandkids never saw mom and dad working as hard as they did. The kids usually kept it alive for the most part. It's the grandkids because they didn't see all the sweat and equity that went into building this empire. And so fast, the empire disappeared a lot of times. And that's what's happening here with our government, if we're not careful. Our whole U.S. system could go the same route as some of these inherited wealth folks had the trouble with. Well, we need to learn from history. We need to learn from others.

08:15 There are plenty of superpowers that have existed in the past that no longer exist. The leading indicator on the way up is economic power. The leading indicator on the way down is loss of economic power. We're not exempt from the laws of prudent finance. If you can't put your finances in order, you will lose economic power with adverse consequences both internationally and domestically. Not only economic consequences but also national security consequences. Now, a lot of people listening say, ah, this doesn't really apply to me. I don't really care. The government's going to do it or they don't do it. But what can we really do? Let's take it down to the grassroots level. People are listening. They're getting mad. They should be getting mad because the dollars, folks, that you've been putting aside are worth less and less because of this. And especially if taxes keep going up, the money you thought you were going to have isn't going to be there anymore.

09:00 And, David, what can the average consumer, the average citizen that's listening right now, how can we get this to a point where we can get that grassroots to grow to 60%, 70%? If we can get up to 70%, 80% of everyone on Congress, they'll have to do something. Well, I'm president of a new and emerging effort that has not gone public yet called We the People. And we're going to try to have a major citizen education activation campaign for the 28th election to get 50 million Americans engaged and communicating with their current and prospective elected officials to make these issues a top priority in the 2028 election. And let me give you some numbers, Pete, that I think people can relate to more.

09:47 Most people can't relate to billions, much less tens or hundreds of trillions. So let's say that Uncle Sam is a real person. And I'm going to take the financial statements for the U.S. government for the year ended September 30, 2025. And all I'm going to do is drop eight zeros. So this is what Uncle Sam's finances look like. He made $52,000. He spent $73,000. He's in the hole for the year $21,000. He's got total liabilities and unfunded obligations of $1,362,000. But don't worry. He's got $61,000 in assets. So he's only underwater $1,301,000. Would you lend Uncle Sam money?

10:33 No. Get out of my office, I'd say. By the way, Jamie Dimon, who's a pretty smart guy, chairman and CEO of JPMorgan Chase, was asked this past week, would he buy long-term U.S. bonds? Personally, he said no. Yeah. I mean, so it's just frustrating when we talk about these kind of things. Folks, if you're interested in finding out how to get that Roth conversion started, because you're going to have to pay taxes when you convert the money from a regular IRA or 401K or 403B or thrift savings plan over to a Roth. But you better pay it now than pay it later over and over again. It's the analogy of a farmer who has a bunch of IRS agents come up when he's planting the seeds one season, and they say, hey, Mr. Farmer, we can either tax you on these seeds and never come back again, or we can let you not pay tax on these seeds today but come back every year at harvest and tax you over and over again.

11:26 I think we all know where we'd stand on that. When we come back with David in a little while, we're going to talk about the We the People tour. We're also going to talk about common-sense strategies we can all employ to make sure that we're on the right track. We'll be right back after this. Loving the conversation today. This really, truly is a special interview that we're having today. Coach, you've brought in David Walker, former Comptroller General of the United States. Folks, if you want to catch up on the conversation, maybe the radio dial has just tuned in to us. Find podcasts online at FinancialSafari.com. Again, that is FinancialSafari.com. David, it's frustrating because you and I both can see this happening, and I know a lot of folks out there can see what's going on with the government. But nobody wants to do anything about the debt. And it's, you know what happens, it's going to keep growing.

12:13 Can't ignore it. Ignoring is not going to make it go away. No one wants to make these uncomfortable decisions. They don't want to get voted out, I guess. So it's a lot easier to promise people a lot of free stuff than it is to tell people we need to tighten the belt a little bit. Well, everybody wants something for nothing. I mean, you know, one party wants to have tax cuts. The truth is not all tax cuts stimulate the economy. Very few pay for themselves. The other party wants to grow government even more, even in circumstances where we're not generating the results that we need to achieve. The truth is we're going to have to reform Social Security and make it solvent, sustainable, secure. We're going to have to do the same thing for Medicare. But we've way overpromised on health care. We're going to have to dramatically reform our health care system. We can get into that if you want. Yes. Social Security is very easy to solve.

13:00 We can exceed the expectation of every generation of Americans. We can talk about that a little bit if you want. But the toughest choices are going to have to be on health care and taxes. Those are going to be the toughest choices. Well, we were talking when I told Thomas that I was going to have you on this week. Well, last week we started talking and I said, you know, this debt is out of control and people don't realize it. And David's been talking about it for a long time. The Social Security aspect, the health care aspect, and nothing is good about this. So Thomas was excited to have you on because he did want to hear about your opinions on, I know, Thomas, you mentioned the health care there, because the Obamacare, when it came in, was supposed to lower prices and all it has done. It was a big time bomb, wasn't it? It was. It's been especially having four kids now. We have to have these conversations.

13:46 It feels like every month or two, do we go to the doctor or not? And I can't believe in America I'm having to ask that question. Yeah. So what do you think about the health care, Dave? Well, first, we've over-promised, over-subsidized, and we have failed on the three elements you have to have to have a successful and sustainable system. Now, we're in baseball season. Let me tell you what those three are. Number one, you have to have properly designed incentives that encourage people to do the right thing and discourage them from doing the wrong thing. You need to have adequate transparency, including things like cost and quality, to provide reasonable assurance they will do the right thing and discourage them from doing the wrong thing. And then you have to have appropriate accountability, which means positive reinforcement when people do the right thing and accountability when they don't.

14:35 In the case of health care, we're zero for three. That's a strikeout, okay? And so we need to step back and ask ourselves how much universal health care, and I did use the word universal, how much universal health care is appropriate, affordable, and sustainable? And most Americans believe that's preventable wellness and catastrophic care that everybody ought to get. If you want more than that, then you get it from your employer, you get it from your union, you get your industry association, or maybe you buy it through the Affordable Care Act, which is, by the way, misnamed, just like the Inflation Reduction Act. How does that work out, okay? But, you know, you've got to keep in mind Congress is not subject to truth in advertising laws, okay?

15:22 If they were, a lot of people would be in trouble. But, so, you know, we need a dramatic reform because we spend about 50% more of our economy on health care than other industrialized nations as a percentage of GDP, and we get below average results. Yeah. Well, you know what's been very troublesome to me is the amount of fraud we keep seeing, like billions and billions of dollars of fraud. I'm kind of mad that I didn't think of one of these things and open up some phony companies with phony patients and no beds and bill the government for billions a year and just get away with it. Because I really haven't seen anyone, you know, we're not seeing these perp walks. And if you don't see the perp walk, I mean, you start thinking maybe I should try something. Well, you know, criminals go where the money is. You know, remember, you know, people asked in the past, why do you rob banks?

16:07 That's where the money is. That's Willie Sutton. Yeah, yeah, I remember they said. Health care is where the money is, okay? Right. But understand this. The federal government needs to learn a lesson. You need to have adequate controls up front before the money goes out. Because once it goes out, you're probably not getting it back. The other thing you need to do is you can't have self-certification. Newsflash. Criminals have no problem self-certifying if they're eligible for something they're not eligible for. And then thirdly, you have to have information systems that will share information, you know, across these different systems. You know, so you're not paying things to dead people. So you're not, you know, very simple things. But again, the government is a lag indicator when it comes to these things.

16:56 And so, like, Social Security, what's the solution for that? Because we're coming right up. I mean, we're right here on the deadline now. It's just a few years ago where people are going to start feeling catastrophic changes. Well, here's where I think we're going, okay? As I said, we can exceed the expectation of every generation of Americans because young people don't think they're going to get it. And they're wrong. They are. They're going to get it probably at a different age and maybe a different amount. Seniors think they're going to get cut dramatically. That's not going to happen either. So we can reform it, phase in the changes, and everybody gets more than they think they're going to get. I think that's exceeding expectations. So what are some of the things? I think we're probably going to see a further gradual increase in the normal retirement age because we are living longer. Secondly, I think we're going to see a significant increase in the taxable wage-based cap, but not an elimination of the taxable wage-based cap.

17:48 I think we're going to see an effort to try to prevent, or if we can't prevent it, minimize tax rate increases because that's a very regressive tax. I think we're going to see adjustment in the benefit formula so we end up keeping more people out of poverty, but we don't turn it into a means-tested welfare program. But upper-middle and upper-income individuals get somewhat less of a replacement rate than otherwise. I think we're going to see changes in the cost-of-living formula, if you will. And I think we're also going to see, for people that don't have an employer-sponsored retirement plan, an automatic savings supplement that would come on on top of the reform-defined benefit system.

18:34 And I think we'll keep the defined benefit system because most everything else you have in the retirement world is defined contribution, where the individual ends up bearing the investment risk. Again, folks, we're talking to former U.S. Comptroller General, Mr. David Walker, joining us, generous enough to join us for two segments today. David, here's what Thomas said to me the other day, and I looked at him and he said, I could say it. We did this little back and forth, and he said, oh, you could say it. We were doing our little communications by sign, baseball signs. I was throwing signs to him. And he said this to me. He said, Coach, if they would have let us have our own individual Social Security accounts when we first started this system, we could have all picked where we had our money, but we all would have had our own money in our own little accounts. Why did the government not do it like that? Well, for one thing, the government created this program in 1935.

19:21 It started paying benefits in 1940. It's a pay-as-you-go system, and therefore the people who ended up getting the early benefits got a huge return on investment, okay? You know, the simple fact of the matter is is that most people don't understand that Social Security is three insurance programs. It's just not a retirement savings account. It is retirement income. It is disability income. And it is survivor's income. And one of the guys that's going to be going on tour with me is a guy by the name of Joe Penland Sr., Joe from Texas. And you can find out more about it at his website, Joe from Texas. And he benefited from all three of those programs when he was young. And he's lived the American dream. He's now wealthy.

20:07 He's a very successful entrepreneur. But, you know, you need to understand what the system is. Insurance system, not just, you know, a savings and retirement account. Yeah. Well, it wasn't designed to be that. It was designed to be a safety net, which that's – Correct. We want to keep that safety net. We can't live – like, you need other money to supplement that, but it's a good way to help pay the bills, I guess, to the living expenses. Well, you know, when we formed it, it was intended to be the foundation. And like a house, you can't just live on a foundation. You need – Get rain done. You need a sponsored plan. You need personal savings on top of that in order to have a habitable dwelling. Yeah. We've got a couple minutes here before we let you go. I want to ask you what you think about this, what appears to be a push towards socialism. Where do you think the money is coming to get all these political ads to push socialism?

20:55 Do you think it's coming from other countries that are trying to bring us down by making us try to get too many people interested in socialism? They've never told them the bad things about socialism, have they? Unfortunately, many Americans don't learn from history and don't learn from others, and this is a perfect example of that. There has never been a true socialist, which many times converts into communism, that's been successful, that stood the test of time. And if you want to scare the bejesus out of somebody, have them read the platform for the Democrat Socialists of America. It's basically paralleling Saul Alinsky's, you know, communist principles, you know, take control of education, take control of health care, don't worry about deficits and debt, tax the rich.

21:43 I mean, it's, you know, it won't work, okay? But again, the problem is people don't learn from history and people don't learn from others. If they did, they wouldn't have anything to do with this. And I'm one of the national co-founders of a group called No Labels, and No Labels is trying to fight the wingnuts, including the Democratic Socialists of America, and provide support to the Sensible Center, which is mainstream America, no matter what your political affiliation is. I think the Sensible Center is about 80% of the people, and like you call them, the wingnuts are 10% on either side, right around there. Yeah, the Sensible Center is at least 60%, at least 60%, and last time I checked, that's a winning formula. It is. It's a majority. Let's say change those rules. That doesn't meet the filibuster requirement, but yeah.

22:29 You know, once I started studying Saul Alinsky, you see it all the time these days. I mean, if you study his rules for radicals, I mean, you can, I can see it. I said, oh, here, they're trying that method. And you know why? Because it works, because nobody's really, nobody calls them out on it. But we see it. I mean, you can see it, and once you see it, you never don't see it, can you? Nope, that's right. Folks, his name is David Walker. David, when is the book coming out, and when is the tour? I think the book will probably come out on Amazon around October time frame, and you know, we're going to start doing some events later this year and continuing into 2027, because as I said, this is not going to be a big issue for the midterms, but it will be. It must be for the 28th election. Well, when the book comes out, we're going to have you back on. How's that? That'd be great. All right, folks, David Walker, former U.S. Comptroller General, thanks for your time today, and folks, we'll be right back after this.

23:18 Thanks, David. Thanks, Coach Pete. Take care. Thomas will get you a copy of this when we get it done. Yes, sir. Sounds great. Take care. Take care. Bye-bye. Bye. Bye. Bye.