TAXPAYERS' BILL LEAPS BY TRILLIONS
May 20, 2008
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, says USA Today.
According to a USA Today analysis:
- 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; 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; 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.
- Medicare alone has an unfunded liability of $30.4 trillion, meaning in addition to paying all future Medicare taxes, the government needs $30.4 trillion set aside in an interest-earning account to pay benefits promised to existing taxpayers and beneficiaries.
The reason for the discrepancy: Accounting standards require corporations and state governments to count new financial obligations, even if the payments will be made later. The federal government doesn't follow that rule. Instead of counting lifetime benefits for programs such as Social Security, the government counts the cost of benefits for the current year.
Source: Dennis Cauchon, "Taxpayers' bill leaps by trillions," USA Today, May 19, 2008.
Browse more articles on Tax and Spending Issues