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?
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May '10
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Isn't that what the CBO is for?
Jan '11
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Knowledge isn't the problem. The problem is spine and will.
The assumption is that if the public really knew about the magnitude of the debt, we'd stop accumulating more of it. But we have no evidence that they would, and plenty of experience to the contrary.
When politicians are punished, politically, for driving up the debt, that's when it'll change. Until then, they'll take the easy way out.
Dec '10
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
I think any information put out by an ombudsman would be filtered through the media and come out as rainbows and unicorn poop (which thankfully is a renewable energy resource) when the MSM is done with it. I don't believe the change required of the people will be accomplished from on high. It will be done in coffee shops, at diner counters, in living and dining rooms in private homes, on the golf course, in the locker room at the Y, and anywhere real individuals take on the task to communicate the truth to other real individuals. In one way Roberts was right: it is entirely up to "we the people" to clean up this mess.
Sep '10
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Based on my reading of Plato (who guards the guardians?) I have to say no. Having ten mother hens nag you about your spending won't work if 3 mother hens nagging you about spending haven't worked so far.
The flaw in the Republic is in the souls of its citizens; unless they turn around they will go over the cliff along with their flat screen tvs and 7-11 Big Gulps.
Apr '11
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Would the progressive Republicans or the progressive Democrats be in charge of this ombudsman?
Would this ombudsman do a better job than the NYT or WaPo ombudsman? Or the CBO?
Edited on July 19, 2012 at 3:40pmMay '11
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
How well have the "Balanced Budget" LAWS worked so far? If legislators can circumvent laws, they can surely ignore suggestions.
Jun '10
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
The public doesn't have the stomach to face the music. After all, "they promised me! " Ask the people of Stockton what happens when the money runs out. But it's not all the promises that won't be kept that's the problem. It's the debt. When borrowers can't pay, the money simply disappears. It's called wealth destruction. We could print our way out of it, but inflation is just wealth destruction in another form. We are about to witness something unparalleled in the annals of history. The entire world economy is about to go belly up. It was nice while it lasted.
Jul '12
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Would another gimmick work?
Pseudodionysius nailed it. The problem is in the diseased souls of the people and the only cure for that disease is the hard cure. But I don't know what to think of the Tea Party and how strong they are. Perhaps I am wrong.
Edited on July 19, 2012 at 4:23pmJan '11
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Can we just stick to social and moral issues in our elections, please? [/sarcasm]
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
A reliance on credentialed experts is the core of the Progressive agenda.
Look where that has gotten us!
By the way, the people haven't demanded these programs. They have unfortunately come to depend on them.
The Progressive transformation of the American regime has been a largely top-down phenomenon. Think of the reliance on unelected bureaucrats and courts to move the Progressive agenda forward; Progressives have had to rely on extra-constitutional means since about 1920.
Nov '11
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Like several have mentioned, I doubt we will discover the noble philosopher-kingly actuary necessary to be an impartial ombudsman of our debt/deficit situation.
However, is there a way to strip the various agency reports/proposed legislation of jargon and make them more accessible to the public? I think such a program would run into similar problems.
Jul '12
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Why the sarcasm? I remember a time when any educated person you might have picked at random would have readily agreed that morality is of primary importance. Consider the Founding Fathers, Tocqueville, et. al. Were our ancestors all misguided? Look around you. If they were fools, what are we?
Edited on July 19, 2012 at 5:25pmSep '10
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Alas I must also join the chorus of no's.
However, we might move pats of the Bureau of Economic Analysis (or another org. but as an example) from where it is to a largely independent organization which sets up guidelines on economic analysis. The analyses would be done by others and the mini-BEA (in this case) would only provide a scoring and police function.
The only question I have, is how to maintain the integrity of this group over time. One way is to keep its mandate tightly focused and the other is to keep it out of congress' clutches with regards to funding. I would propose a utility type model whereby the BEA would charge a fee per analysis that is done to cover its operating costs. Congress could abolish the BEA but could not hold its funding hostage without stopping legislation entirely (this of course would be a feature rather than a bug).
Apr '11
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Politically, Progressivism in all its manifestations is THE problem.
Actuaries produce valuable information and develop many useful options for managing risk, but I see any actuarial ombudsman as a pudgy little finger in a very "holey" dike. The most likely result, realistically, would be the addition of one more corruptible person (or more likely, group of persons) to an already ineffective corps(e!) of officials.
I like the objection that we are trying to cure Progressivism's consequences with more Progressivism, but the association of the actuarial profession with the realities of life -- poor health and death, in particular -- gives some connotative insight. We lack health and vitality as a nation, as measured by the traditional rulers: growth, vigor, and prosperity. We are stagnant, jaded, and, very poor in terms of measurable wealth (calculate that net worth if you wish, it's an ugly spreadsheet right now).
We have much that we might do to repair this if we regain our vigor, but rejecting Progressivism utterly has to come first.
My full view and rant, including my view of the moral dimensions of our problems, is here.
Oct '11
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
No because we have a CBO and an OMB. What we need is a balanced budget amendment. Then choices will have to be made and elections will have consequences. And, that would be a good thing.
Jan '11
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Eric Voegelin
Why the sarcasm?
Why? Well, since you asked I will lay it out there. I feel that there are too many conservatives who make the social and morality issues the center of their decision-making while the fiscal issues aren't so high up on their priority list. I also feel that because of this, our candidates spend more time on issues that are not fiscally related. In times like these, I think it's a huge mistake to not be all in on the entitlement crisis and discussing ways to tell people that entitlement promises are going to have to be broken to save the county from ruin.
My personal wish is that a candidate would say: "Look, if you want values-based legislation, you better be championing it at the state level [where it belongs]; there are bigger and more important things that need to be done away with at the federal levels of government. The last thing I'm going to do is centralize decisions even more from D.C."
Jul '12
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
LowcountryJoe: Thanks for the reply. I guess you've made a clear case which is to say that the entitlement issues are more important than the moral ones. But even if those entitlement issues are closer to your heart, your cause would be better served with moral arguments. Taking money from others is immoral. Unless you can convict the people of the wrongness of all of this, you may win battles but you'll lose the war. In other words, as long as you believe you're entitled, you'll never stop demanding.
But honestly, I suspect the issue is moot; we're too far gone. I think reality is going to be imposed on us by the market.
May '12
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
I don't think it is a bad idea, but don't expect it to change anything. The data regarding our tax receipts, outlays, debt, SSA, HOPE Bonds, etc. and all the schedules are available for free. It does require some digging and persistence, but it is there. I will be glad to provide all the links I refer to.
With all the data that is available and power to analyze we still believe we can have all these benefits, pay for a portion of it with ourtrageously progressive taxation, borrow the rest, and experience no consequences nor show any sense of urgency to deal with what few consequences that may be acknowledged.
The Ombudsman could bake the cake prettier, but we would still want to have it and eat it at the same time.
May '12
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
Monthly Treasury Statement. The big picture on receipts, outlays, and deficit.
Monthly Statement of Public Debt. How much we owe, including intragovernmental holdings - and yes, we have to pay this back.
Tresury International Capital. Who we owe it to. We are our own largest creditor, but we are also the world's largest international debtor. This site is not easy to navigate. I have to use it 2x per month and open almost every link before I find what I am looking for.
Federal Reserve Data. This is a bonus site, you can find the size of the Money Supply, banking stats, interest rates, capacity utilization, etc. The best economists in the world are Fed Reserve Staff. A close second is the CIA. The ones that think more gov't is the solution to everything from baldness to poison ivy write columns for the NYT and work at the World Bank and IMF, see also - Nobel Prize.
Sep '10
Re: Would An Actuarial Ombudsman Help With Our Entitlement Crisis?
I'll go further. There is no such thing as values. The Founding Fathers understood that its virtue, not values, and those virtues lie in the soul of its citizens. Once the virtuous are out numbered by those in a democracy who are not its simply a countdown until tyranny. The genius of the constitution and its ancillary documents was to create a sophisticated set of firewalls to avoid rash decisions and make overarching national institutions that would fondle you in airports and suffocate or starve you in your hospital bed difficult, not impossible, to create.
But even a firewall will eventually be consumed by the disordered passions of its citizenry if virtue starts to die.
Edited on July 23, 2012 at 3:50am