Tuesday, May 20, 2008

USA Today: Taxpayers' bill leaps by trillions

USA Today has long had an interest in budget accounting and entitlement reform. Yesterday's front page story attempts to make an all-in measure of government obligations, expressed both in total and on a per-household basis. While one can quibble with how certain things are measured, the broader point is that we have a large number of very significant financial obligations that are "off the books" -- that is, distinct from explicit debt issued by the government. Going forward, we must decide how much of these future obligations to honor and how to raise funds for those that remain.

Taxpayers are on the hook for a record $57.3 trillion in federal liabilities to cover the lifetime benefits of everyone eligible for Medicare, Social Security and other government programs, a USA TODAY analysis found. That's nearly $500,000 per household.

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.

As an aside, I spent yesterday in Jacksonville, Florida appearing with the Fiscal Wake-Up Tour, a Concord Coalition project featuring former Comptroller General David Walker, who now heads up the Peter G. Peterson Foundation. While running the GAO, Walker put together a list of obligations similar to that published yesterday by USA Today.

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