The U.S. faces a fiscal crisis with Social Security, education, and healthcare costs spiraling out of control. As debts soars to unprecedented levels and critical social programs edge toward insolvency, America faces a perilous fiscal crossroads. This article proposes a novel, intergenerational trust‑based framework aimed at rescuing social programs, unleashing sustainable education and healthcare funding, and restoring long‑term fiscal stability.
The Growing Crisis
- The Social Security Act states that if the trust fund reserves are depleted, the program cannot pay out more in benefits than it receives in revenue, triggering a projected automatic 23% benefit cut.
- Healthcare costs at $4.9 trillion in 2023, medical debt affecting 41% of adults.
- Student loan debt nearing $1.64 trillion; household debt ~$18.39 trillion.
- Federal debt topped $36.2 trillion; U.S. credit rating downgraded to Aa1.
A Bold, Trust-Based Solution
I recommend widespread adoption of long-term intergenerational trusts—-legal perpetuities bolstered by financial perpetuities—-structured around healthcare, education, maintenance, and sustainability goals, and spendthrift protections. The guiding mantra: "In God We Trust"
- Capitalization-of-Earnings. The first principle of compounding economic growth is to leave the principal alone. By design, the trust’s corpus remains untouched. Each trust invests capital in diversified assets—such as equities, bonds, currencies, real estate, and commodities—that generate dividends or interest income. Diversified investment returns compound tax‑efficiently in trust—historically at 9 to 10%. Following an income only distribution or a conservative 2% or 3% rule, the principal remains intact, perpetually growing in real terms while funding future generations' healthcare and education needs. As healthcare and educational costs rise, these distributions adapt, preserving access while principal growth keeps pace.
- HEMS Provision. Distributions are restricted to specifically address healthcare, education, and social security needs.
- Spendthrift Provisions. Beneficiaries cannot assign, pledge, or involuntarily lose their trust interest, preventing misuse, irresponsible spending, predatory lending, and creditor seizures.
- Perpetuities. Trusts are drafted under state perpetuities reform statutes to exist in "perpetuity" or for very long durations, ensuring long‑term intergenerational benefit. A generation as trustee or a hybrid trustee board with qualified fiduciary experts provides oversight, aligned with the duty to sustain principle.
Costs, Benefits, and Feasibility
- Public Incentives via Estate Tax Credits or Unlimited Deductions. Individuals and estates contributing to approved intergenerational trusts could receive estate or gift tax breaks, encouraging legacies and reducing government dependency. Qualified medical and qualified education expenses are not counted as income for trust beneficiaries.
- Term Life Insurance. Families of modest means can fund these trusts with term life insurance death benefits, ensuring children or dependents inherit a protected stream of income focused on healthcare, education, maintenance, and sustainability needs.
- High Net-Worth Contributions. Wealthy individuals can establish lump-sum trust contributions for children, grandchildren, or community beneficiaries. Contributions can be aligned with philanthropic efforts, business exits, or estate planning—allowing growth in perpetuity while maintaining strict distribution rules.
Impact and Long-Term Discipline
| Benefit Area | Description |
|---|---|
| Fiscal Relief | Shift from entitlements towards efficient trust-based distribution. |
| Healthcare Coverage | Funds medical costs and long-term care. |
| Educational Access | Stable funding without borrowing. |
| Debt Reduction | Reduces reliance on student loans and high-interest credit cards. |
| Social Security Supplement | Helps mitigate potential benefit cuts. |
Call to Action
I urge policymakers, state legislators, communities, individuals, and philanthropic institutions to explore and pilot this innovative trust‑based capitalization model. Time is of the essence. Healthcare and education costs escalate while Social Security funds degrade. Without structural innovation, the next generation faces diminished security—and America risks deepening fiscal and civil crises. This trust‑based structure is a bold, disciplined, and long-term path forward built on a proven legal and financial architecture.
Media Contact:
Abraham Doe
Email: adoe@gse.upenn.edu