In an unusual display of fiscal rectitude for Washington, the can that politicians are always kicking down the road may finally be kicking back with the launch of a campaign to push for honest numbers in government budgeting.
It’s not just the bipartisan legislation that Sens. John Thune, R-N.D., and Tim Kaine, D-Va., introduced two weeks ago in the Senate but the campaign surrounding it, including a veritable torch and pitchfork-wielding mob of prominent economists and former government officials endorsing the bill.
“You never see 11 Nobel economists endorse something—never, never, never, never, never,” Boston University economist Laurence Kotlikoff (left) told ThinkAdvisor in an interview.
The busy academic, who has supplemented his teaching, book and academic journal writing with a maverick presidential campaign last year, drafted the aptly named Intergenerational Financial Obligations Reform (INFORM) Act. U.C. Berkeley economist Alan Auerbach edited the bill’s language.
The legislation would mandate detailed cost analyses of congressional and presidential spending initiatives. Specifically, it would institute what is known in economics as fiscal gap and generational accounting, which include future financial obligations that are currently off the books.
“Have you seen those greenish-yellow Social Security checks your mother gets every month?” Kotlikoff asked. “Well not a penny of it is recorded as official debt.”
The Boston University economist has been writing for 30 years on the problems attendant on government commitments which are mostly off the books. “Official debt is only one-twentieth of our true obligations,” he warns, calculating our true debt today weighs in at $222 trillion.
If the current generation does not accept higher taxes or reduced benefits, they will be in effect shifting the cost of their living standards onto a less affluent younger generation.
Kotlikoff’s Inform Act website has tabs for Nobel Prize-winning economists such as Kenneth Arrow and William Sharpe, former government officials like George Shultz and Michael Boskin, hundreds of economists and finance professors like Jeffrey Sachs and Kent Smetters and other supporters such as columnist Scott Burns and broker-dealer executive and ThinkAdvisor contributor Bob Seawright.