SOCIAL SECURITY ACCOUNTING CHANGE SOUGHT
October 24, 2006
The Federal Accounting Standards Advisory Board (FASAB) recommends changing how the books are kept on future Social Security and Medicare benefits. They say Americans need a better sense of the government's fiscal health.
The change, if approved, would have no impact on benefits themselves. It would, however, show just how much the social programs truly cost, which proponents say would highlight the need to find long-term fiscal fixes, says the FASAB:
- Social Security, for example, is running big surpluses now but faces bruising demographic changes in coming decades; increasingly fewer workers are paying into the system for each retiree, and that will only worsen as the baby-boom generation retires over the coming years.
- Medicare is also facing a fiscal train wreck in coming decades because of similar demographic pressure combined with rapidly rising health care and prescription drug costs.
- Under current rules, the Social Security program is posted on the government's books as a cash transaction; taxes and interest income are on the revenue side of the ledger, and benefit payments are on the spending side -- Medicare is far more complicated.
Promises of Social Security and Medicare benefits are seen by many as a binding contract. Taxpayers receive annual reports detailing their future benefit packages every year. The FASAB argues that the promises should be put on the books right away.
Source: Andrew Taylor, "Social Security Accounting Change Sought," Associated Press/Houston Chronicle, October 23, 2006.
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