Academic journal article The Journal of Government Financial Management

Last Call for Common Sense - in Addressing the Fiscal Sustainability of the U.S. Government

Academic journal article The Journal of Government Financial Management

Last Call for Common Sense - in Addressing the Fiscal Sustainability of the U.S. Government

Article excerpt

If not us, who? If not now, when?" This was the frequent exhortation of Relmond Van Daniker, Ph.D., CPA, during the 11 years he served as executive director of AGA until his retirement in 2014. This phrase, whose origin is often questioned but is widely attributed to President John F. Kennedy, was intended to spur AGA's members and all government financial management leaders to assertively address the major financial management challenges facing federal, state and local governments.

All government accountants who heard Van Daniker's continuing exhortation clearly understood its meaning: the challenges of ensuring government accountability were ours to face. We understood we were well-equipped to comprehend the fiscal condition of our respective governments, in part because we were responsible for the preparation and issuance of annual financial reports that comprehend the totality of a government entity's activities and operations.

The formal roles and professional standards that inform the conduct of the government financial management community are among the most demanding placed on anyone serving in government. Added to this level of responsibility are the extraordinary complexity and diversity of government activities and the extent to which Americans rely on their governments. That is why the characteristics of such professionals most expected within the community include integrity, objectivity and independence, and that special and always difficult duty of "speaking truth to power."

With hard work, diligence, an inquisitive attitude and personal courage, members of the community have, over the past 30 years, successfully established a reliable and uniform structure for financial reporting, as well as a companion structure for auditing and attesting to such reporting. This community has embraced modern technology; introduced operating efficiencies; reduced fraud, waste and abuse; exercised important intergovernmental cooperation; stressed the importance of governmental performance; and continues to build extraordinary capabilities to ensure the transparency and accountability of government fiscal activities.

Despite all that the community has accomplished, one enormous challenge remains - rebuilding federal fiscal sustainability. Fiscal sustainability requires a government to ensure:

* revenues and expenditures are, over time, kept in reasonable balance;

* borrowings are held to a level where repayment can be anticipated and scheduled; and

* obligations for the payment of pension, social insurance, and other long-term benefits are recognized as they are earned or qualified for, and funds required to meet these obligations are set aside for eventual use.

Although centered on the federal government, this particular challenge deeply affects all state and local governments, the business community and individual citizens. Greatly exacerbating the situation has been the absence of leadership sufficient to effectively address the challenge in a consistent and timely manner. That the federal government is no longer fiscally sustainable today is a problem for today, not some time in the distant future!

REPORTS PROCLAIM THE FEDERAL GOVERNMENT IS FISCALLY UNSUSTAINABLE

The secretary of the U.S. Department of the Treasury (Treasury) and the comptroller general of the United States are charged with reporting on the fiscal condition of the U.S. government, which they do annually through the issuance of the Financial Report of the United States Government - arguably the world's most important annual report. It is important to read what these most senior, knowledgeable and responsible financial management officials say as they identify in clear and unambiguous terms the enormous challenge that fiscal sustainability poses to our country.

In the transmittal message for the 2014 Financial Report of the United States Government (Financial Report)1 Secretary Jacob Lew states:

Now is the time to invest in America's future in order to drive inclusive economic growth and opportunity, secure the nation's safety, and put the nation's finances on the road to a more sustainable fiscal outlook. …

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