The U.S. government is too big to fail, says David Walker, former Comptroller General and CEO of the Peter G. Peterson Foundation. But the fiscal similarities between the subprime crisis and the government are too big to ignore.
"These similarities ought to ring an alarm bell for Congress and the presidential candidates," Walker writes in the Financial Times.
"The question is, will they hear it and wake up?"
Washington has charged everything to the nation's credit card, legislating tax cuts and spending increases without paying for them, says Walker.
Moreover, there is a dangerous disconnect between those who benefit from financially dangerous practices and those who ultimately pay the price.
Federal politicians have increased spending, expanded government entitlement programs, and agreed to tax cuts without considering their long-term costs, he says.
Walker sees a lack-of-transparency parallel between Washington and Wall Street as well.
"Banks and other financial institutions created off-the-books entities so that regulators would find it hard to track the risks to their health," Walker points out.
In addition, the federal budget doesn't show the government's more than $40 billion in off-balance sheet and unfunded promises, commitments, and contingencies.
Flawed guarantees given to investment products by credit rating agencies mirror those given by the government to foreign purchasers of American debt issued by Fannie Mae and Freddie Mac, Walker says.
The result is that the U.S. taxpayer now stands behind more than $5 trillion in mortgages.
"While the U.S. government is too big to fail, continuing on our current path will have adverse implications for our economy and international standing," Walker says.
"The sooner Washington acts, the better."
© 2017 Newsmax. All rights reserved.