Former Treasury Chief O'Neill Speaks to Fiduciary Crowd at fi360 Conference

Should government officials be fiduciaries too?

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"Get more people in government to believe that they have a fiduciary duty!" exclaimed former Treasury Secretary Paul O'Neill, at the fi360 National Conference in Orlando on May 6. O'Neill remarked about the "9.7% unemployment rate, saying that the rate reflects action taken "when we hit the wall and were on the brink of dissolving ourselves," by companies, "in the private sector that were...more imaginative" than was typical. They laid off workers, and now that, "we've stabilized, if the government doesn't do another dumb thing, we'll keep moving and begin to absorb the unemployed."

He says we are not out of the woods yet, however, that we need a "growth rate of between 5% and 6% to absorb 150,000," jobs per month that need to be created for the growing American population and to begin "to absorb the unemployed."

Greece in Crisis

Regarding the crisis in Greece, O'Neill noted that everyone is worried about the PIIGS--Portugal, Ireland, Italy, Greece and Spain, which "also borrowed beyond their capacity to service debt." Contagion is but one issue; another is spreading the solution to the problem very far afield--saying that the "IMF intervention is about globalizing a solution to this problem," and adding, "I do not believe the carpenters and plumbers in Chicago should have to help," Greece get out of their crisis. He argues that there needs to be an orderly way for there to be a "bankruptcy for a nation," as a way of "dealing with nations who have defaulted." Otherwise the defaults will just continue to periodically pop up around the globe, according to O'Neill.

O'Neill also had comments on the situation closer to home, wishing we had politicians who were willing to tell the "truth" about some dire circumstances he sees ahead for the U.S. He cites the publicly stated "$10 or 11 trillion in U.S. government debt," but says the liabilities are "$63 trillion if you account for Social Security, Medicare and Medicaid,"--and are not being counted in the regular "books" for the U.S, but rather in a "second set of books." He says the "unfunded liabilities could result in the U.S. becoming like Greece."

There's hope he said, if we can fix education--which puts out a "faulty product" in which "30%" of the population cannot read; an overly complex tax code in which revenues are "undercollected by $400 billion a year," and medical and hospital care. Medical care in particular wastes a trillion dollars a year in treating the "1.7 million infections" people get while in the hospital, "300 million in medical errors" and the "one fall for every acute-care bed," each year in the U.S.

Then, we'd be on our way to funding the $63 trillion in unfunded liabilities. At that point, O'Neill says, we'd have "a just society where all people have access to health and medical care that doesn't hurt them.

Comments? Please send them to kmcbride@wealthmanagerweb.com. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.

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