Real Federal Deficit Dwarfs Official Tally

May 30, 2012

The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, according to a USA Today analysis.

  • Under those accounting practices, the government ran red ink last year equal to $42,054 per household -- nearly four times the official number reported under unique rules set by Congress.
  • A U.S. household's median income is $49,445, the Census reports.

The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits.  Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.

  • The deficit was $5 trillion last year under those rules.
  • The official number was $1.3 trillion.
  • Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government's books.

Other key findings include:

  • Social Security had the biggest financial slide. The government would need $22.2 trillion today, set aside and earning interest, to cover benefits promised to current workers and retirees beyond what taxes will cover. That's $9.5 trillion more than was needed in 2004.
  • Deficits from 2004 to 2011 would be six times the official total of $5.6 trillion reported.
  • Federal debt and retiree commitments equal $561,254 per household. By contrast, an average household owes a combined $116,057 for mortgages, car loans and other debts.

Source: Dennis Cauchon, "Real Federal Deficit Dwarfs Official Tally," USA Today, May 24, 2012.

For text:

http://www.usatoday.com/news/washington/story/2012-05-18/federal-deficit-accounting/55179748/1?csp=hf

 

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