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Consequences of Trust Breaches and Responsibility Abdication

February 2, 2011

Consequences of Trust Breaches and Responsibility Abdication

The people of the United States are very big hearted. Whenever there is a natural catastrophe in a needy part of the world, Americans generously open their wallets to help. Giving USA reported that in 2009 Americans donated nearly $308 billion to charitable causes of which 75% ($227.4 billion) was donated by individuals from all walks of life. Additionally the U.S. Government, on behalf of Americans, contributed an additional $295 billion, according to the Organization for Economic Co-operation and Development. Americans can be counted on to come through to meet pressing needs, whether at home, Haiti, Chile, Myanmar, Indonesia, and other places. This is a source of national pride.

Considering the values, culture, and people that support such generosity, along with the values espoused by elected representatives, one would expect that the  U.S. Government – the “government of the people, by the people and for the people” – would be good custodians of taxes paid by workers and employers that were to be dedicated to Social Security. Americans pay 6.2 percent of their gross earned income, which is matched by employers, to fund Social Security, which then supports retirees and others who qualify for assistance. In light of the Baby Boom generation (25% of current U.S. population) and overall demographic trends, a portion of those contributions were to be retained in a “trust fund,” so when the big wave of “baby boomers” retired, there would be sufficient funds to cover them in addition to millions of current retirees. This was crucial since the system has historically been a pay-as-you-go process, in which current workers support current retirees. This was fine when the ratio of workers to retirees was 16:1, as it was in 1950. In 2005 it was down to 3:1 and will move to 2:1 as Baby Boomers increasingly qualify for benefits.  This problem is compounded by the fact that current and future generations of retirees will live longer, and therefore receive benefits for many more years than past generations. The “trust fund” was established to address this imbalance.

Unfortunately, this “trust fund” was used as a pass-through account. Over the past two decades, administrations and Congresses (controlled by both parties) “borrowed” from the trust fund to pay for discretionary priorities, earmarks, and new government programs. Today the “trust fund” is empty and the U.S. Treasury owes it over $2.5 trillion, which is does not have. In essence, the government has squandered that huge sum. Additionally, it has never developed a plan or timeline for paying the IOUs or making the “trust fund” whole. Now that the government is deeply in debt, to the tune of about $12.5 trillion, it’s unlikely it ever will or can pay this obligation.

So the trust of the American people has been breached – trust that their contributions were being secured for their intended purpose, and would be available when needed without plunging the country into significantly greater debt. Through the decades of “borrowing” from the “trust fund,” neither Congress nor the Executive Branch prepared a plan for recouping the funds. In essence, the government, whose job is to protect the interests of citizens, abdicated responsibility for fixing the problem and enabled it to persist. Elected officials speak of their concern for helping the needy and people on small fixed incomes, and there is much they have done, but in this instance their behavior and decision patterns seem to belie those values.

There is a parallel to Enron. Like many corporations, Enron claimed to live by a set of values. They were respect, integrity, communication, and excellence. But they did not live by them. Their leaders were unethical and unscrupulous, putting their own interests ahead of stockholders, employees, customers, and creditors. Then everything fell apart, and many people suffered as a result. Their values were really just for show, and were dispensed with when they became inconvenient or conflicted with their self interests. Successive Congresses and administrations have done the same – they abdicated their fiduciary responsibilities to the citizens from whom they were collecting Social Security taxes — funds that were to be retained for future distribution. They then continually passed the buck to future Congresses and presidents, so they would not need to make financially responsible but politically difficult decisions or deny inessential constituent requests. Is it any wonder the Congress’ approval rating is at a low of 13% according to Gallup? It’s due to much more than political acrimony.

These same lapses also underpin the mortgage crisis and other financial mismanagement.

If we as individuals followed the government’s example – and unfortunately many did – we would be in big trouble. We would have mortgaged our future, and possibly our children’s future, to take care of “nice-to-haves” in the past and present. These are the consequences of systemic irresponsibility, continual breaches of trust, and the inability or lack of backbone to come to terms with the issues – to take responsibility for them, act to solve them, and be accountable. It’s the inability to say “No” to attractive items or activities that may be popular at the moment, but ultimately sacrifice greater, if future, priorities or a commitment to others.

There are lessons in this for all of us. Are you truly living your values? Are you making hard decisions when you have insufficient funds or time for all you desire, or can’t accommodate every compelling need or request? Or are you “borrowing” in hopes that eventually you will catch up? And if you are, do you have a realistic plan for doing so? Consider how you meet your commitments and whether you are undercutting your ability to keep promises. Have you taken responsibility and accountability for flourishing in the future?

Steve Weitzenkorn

If you like this post you may also like “What Happened to Intellectual Honesty.”

Visit our new website: FindFulfillFlourish.com. Take the FREE Guiding Values Exercise. Identify your most important values.

Copyright © 2011, F3 Forum LLC. All rights reserved.


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