TAXPAYERS ON THE HOOK FOR $59 TRILLION
May 29, 2007
The federal government recorded a $1.3 trillion loss last year -- far more than the official $248 billion deficit -- when corporate-style accounting standards are used, according to analysis by USA Today.
Modern accounting requires that corporations, state governments and local governments count expenses immediately when a transaction occurs, even if the payment will be made later. The federal government does not follow the rule, so promises for Social Security and Medicare don't show up when the government reports its financial condition.
As a result:
- Taxpayers are now on the hook for a record $59.1 trillion in liabilities -- or $516,348 for every U.S. household -- a 2.3 percent increase from 2006.
- By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.
- Unfunded promises made for Medicare, Social Security and federal retirement programs account for 85 percent of taxpayer liabilities, while state and local government retirement plans account for much of the rest.
This hidden debt is the amount taxpayers would have to pay immediately to cover government's financial obligations. Like a mortgage, it will cost more to repay the debt over time. Every U.S. household would have to pay about $31,000 a year to do so in 75 years.
Source: Dennis Cauchon, "Taxpayers on the hook for $59 trillion," USA Today, May 29, 2007.
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