Bill for taxpayers swells to trillions
Costs of Medicare, Social Security boom
The federal government's long-term financial obligations grew by $2.5 trillion last year, a reflection of the mushrooming cost of Medicare and Social Security benefits as more baby boomers reach retirement.
That's double the red ink of a year earlier.
Taxpayers are on the hook for a record $57.3 trillion in federal liabilities - or nearly $500,000 per household, a USA TODAY analysis found.
When obligations of state and local governments are added, the total rises to $61.7 trillion, or $531,472 per household. That is more than four times what Americans owe in personal debt such as mortgages.
The $2.5 trillion in federal liabilities dwarfs the $162 billion the government officially announced as last year's deficit, down from $248 billion a year earlier.
"We're running deficits in the trillions of dollars, not the hundreds of billions of dollars we're being told," says Sheila Weinberg, chief executive of the Institute for Truth in Accounting of Chicago.
The reason for the discrepancy: Modern accounting standards require corporations and state governments count all new financial obligations, even if the payments will be made years from now. The federal government doesn't follow that rule. Instead of counting lifetime benefits of everyone in the Social Security and Medicare the government counts the cost of benefits for the current year.
The deteriorating condition of these programs don't show up in the government's bottom line, but the government releases the information elsewhere - in Medicare's annual report, for example. Since 2004, USA TODAY has collected the information to provide taxpayers with a financial report similar to what a corporation would give shareholders.
Big new liabilities taken on in 2007:
# Medicare: $1.2 trillion.
# Social Security: $900 billion.
# Civil servant retirement: $106 billion.
# Veterans benefits: $34 billion.
The multi-trillion dollar loss is a more meaningful financial number than the official deficit, says Tom Allen, chairman of the Federal Accounting Standards Advisory Board, which helps set federal accounting rules.
After last year's decline, Medicare has an unfunded liability of $30.4 trillion.
That means - in addition to all future Medicare taxes paid by workers and companies - the government needs $30.4 trillion set aside in an interest-earning account, to pay the medical benefits promised to existing taxpayers and beneficiaries. The amount is certain to rise when the oldest of 79 million baby boomers - 62 this year - reach 65 and become eligible for Medicare coverage.
I had a debate a few weeks ago with my favorite group of BQPFRC. Of course they pointed to the Iraq War as the primary threat to our economic wherewithal. I attempted to correct them, stating that according to the conference that I attended with the US Comptroller of the Currency - the 3 big entitlement programs - Social Security, Medicaid and Medicare pose the biggest threats to the US economy's long term position. They told me that I was wrong. They stated, as expected, that the Department of Defense was the biggest drain and that the workers had earned this money for having spent a lifetime paying in.
I hope that having it laid out plain in front for everyone see that they are WRONG. The DoD spends budgeted dollars. Social Security and Medicare are promissory systems where future dollars are committed for the long term care and sustenance of Americans based on their receipt of payments and the social contract that has been established.
Thank you FDR! You are the father of all of this that needs to be worked out now. Now I see why you were smiling. You knew that you'd be long gone when the balloon popped.