Well designed public policy should provide intended benefits and have the ability to calibrate designed actions, fiscal notes, and enforcement. If we want the professional principles of economics and actuarial science to keep such a policy sustained over 50 to 100 years as has been the intent with Social Security, Pensions, and Medicare then adherence with the principles of these disciplines is necessary to avoid the failure of public policy structures.
Leaders must be aware that when they expect professionals they employ to depart from their principles of profession, they are accepting additional risk, they may be a part of corroding an intended policy, and they may be held to account.
According to the most recent Financial Report of the United States Government and analyses by Truth in Accounting and the Cato Institute:
Under GAAP, those unfunded commitments would be treated as long-term liabilities, similar to corporate pension obligations. The resulting balance sheet would shift from showing trillions in assets backed by trust funds to tens of trillions in net negative position.
In essence, applying GAAP would cause reported federal “net position” to collapse by around $110 trillion (the sum of $50T + $60T) compared to current reported figures.
* Other sources report greater unfunded liabilities for various reasons such as recognizing beyond 75 years, or different assumptions underlying the projections. Two other sources, including beyond 75 years, put unfunded liabilities at 165 and 220 trillion.
In engineering, failure analysis teaches us why systems collapse and how to prevent recurrence. The National Transportation Safety Board studies near misses and crashes so that future flights are safer. We trust air travel precisely because this process is transparent and grounded in technical discipline.
Public policy should function the same way. Sound programs are designed to achieve specific outcomes and to recalibrate when experience reveals flaws. If we want Social Security, pensions, and Medicare to remain stable over generations, they must rest on the tested principles of economics and actuarial science. Policies built without those principles eventually fail.
Policy adjustments will always be needed as conditions change and assumptions evolve. The key is how they are made. When recalibrations honor actuarial and economic principles, the system remains sustainable. When they don’t—whether due to political expedience, wishful thinking, or secondary gain—the system corrodes.
Medicine reminds us of another core principle: first, do no harm. The same applies to financing care. For a free market to work, participants need simplicity and transparency. Yet today, individuals face a maze of deductibles, copays, and coinsurance that few can navigate. If insurance is meant to protect against catastrophic, unpredictable costs, should predictable, routine primary care really be called “insurance” at all?
Durable policy requires the integrity of many disciplines—medicine, economics, actuarial science, accounting, and law. When leaders ask professionals to abandon their principles, they increase systemic risk and erode public trust.
We cannot assume that “everyone is departing from principles” without consequence. Each of us has a duty to apply our professional standards to strengthen agency, simplify administration, and ensure that government is only as large as necessary to enable informed individual choice.
