It seems unbelievable to hard-working American taxpayers that our nation could have over fifty five trillion dollars in debt and unfunded liabilities ($55,000,000,000,000), and yet it does. Deriving this figure requires just a minimal understanding of three important financial calculations: 1) the actuarial statistics behind an insurance plan (such as Social Security & Medicare); 2) the concept of adequately funding such a plan using a calculation tool called "net present value"; and 3) the "accrual" accounting method that accounts for the net present value of liabilities. These financial tools inform an insurance manager as to how much money he needs to have parked in an account earning a return today in order to fund a stream estimated future liabilities. This is the way any solvent insurance plan works, but unfortunately it's not the method used by our national retirement system (SS, Medicare, & Medicaid). For a quick introduction to the facts behind this conundrum see this file.

    Instead of funding our retirement system we have relied on current taxpayers to pay for current retirees. Most Americans have no idea that their FICA taxes (a form of insurance premium) are not fully saved and invested for their future retirement but instead pay for CURRENT retirees and general Federal expenses. Because the ratio of workers to retirees is falling, this method has been actuarially unwise for over a generation. However, because this crisis has been "a long way in the future" and requires tough decisions, it's simply been ignored. It is conveniently hidden out of sight in Federal accounting that does not use the same "accrual" method of accounting for liabilities that is required of every publicly-listed American corporation. Time has now run out. Decades of neglect have brought the U.S.A. to the brink of financial insolvency and without public initiative our elected officials cannot solve the problem.

     This financial crisis has many causes and proposed solutions. But no progress can be made until a critical mass of American people first recognize the problem and agree to resolve it. The specific solutions can be arrived at after vigorous debate and review of our options. This process will take time and will be politically challenging.

     The FSP believes that if progress cannot be made in Kansas, in the heartland of the U.S.A., it probably can't be made anywhere else. The issue of gross federal indebtedness is now washing up at the Kansas Statehouse, plunging our State into budget shortfalls that will soon exceed $1,000,000,000 per year. We must begin to fashion a long-term solution to this problem now, so that within the foreseeable future we will be looking at a way towards solvency instead of certain bankruptcy.