Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Congress keeps on passing legislation that the country can't actually afford. But how to solve the problem? Jason J. Fichtner and Frederick W. Kilbourne point out that depending on which assumptions you accept, Social Security will go bankrupt in 2027, in 2033 ... or never. And that complete confusion about when it will dry up shows the public doesn't know the true costs of various legislative efforts or how to avoid insolvency. They suggest that a credentialed actuary be put in place to analyze legislation and to assess the fiscal challenges facing the nation based on the promises made and the funding required.
They point out some figures that an actuarial ombudsman could share with the public:
$100 trillion: that staggering sum is a lowball estimate of the amount needed to be placed in a bank account today, right now, to cover promises already made by our federal government. These promises are the scheduled payments to be made in the future to bondholders, social insurance trust funds, Social Security recipients, Medicare providers, federal employees and retirees, and a host of others. The $100 trillion is over and above taxes already scheduled to be collected under current laws.
$1 million: another staggering amount that is the cash required from each U.S. federal income taxpayer immediately, in order to set up the $100 trillion account. It presumably could be financed with more federal debt and thereby pushed off to future generations -- but that’s how we got in this mess in the first place. We’re mortgaging our kids and grandkids futures. Who’s to say that they will be willing or even able to meet the payments that we have bequeathed to them? It surely isn’t fair!
$500,000: the $1 million due from each taxpayer could theoretically be cut in half if we first confiscated the entire net worth of the top 1% of Americans and applied that money to the $100 trillion bank account. But that’s a silly idea. Any proposed confiscation will surely have some adverse effect on capital formation and job creation, likely leading to lower revenue collection and increased federal expenditures. As large as $100 trillion sounds, it’s actually based on the underlying premise that federal deficit spending will cease immediately and permanently, and that is currently not in the cards. As we continue to fund our priorities with even more debt, the $100 trillion amount will be that much larger. Not to mention, we have made no provision for state and local government debt. The $100 trillion is based on promises made at the federal level only. Add in state and local pensions and other debts and the amount increases by $10 trillion.
How did we get in this mess? The inescapable answer is that our politicians have been successful at buying votes by means of promising benefits in excess of taxes. They found it easier to get elected by promising benefits today and putting off paying the bill -- hoping that tomorrow will not show up while they’re still in office.
The United States faces yet another $1 trillion deficit and the acknowledged conventional national debt is now well over $15 trillion. The true national debt, including unfunded but real liabilities, is $100 trillion and growing. At some point, entitlement reform will be necessary. Deficit financing can’t go on forever. Where will the public turn for unbiased information? We think the time has come for an actuarial ombudsman.
What do you think? Would an actuarial ombudsman help change the debate over our debt and deficit?