Federal Liabilities: 2015 Update
July 21, 2015
Limiting the Social Security and Medicare benefits to just those payable to current retirees produces a liability measure of almost 17 trillion. However, when official liabilities and the Social Security and Medicare benefits to be received are totaled, the liability measure rises to $37.8 trillion, which is 217 percent of GDP.
Liqun Liu, Andrew Rettenmaier and Thomas Saving of Texas A&M's Private Enterprise Research Center argue that Social Security and Medicare benefits payable to current retirees should be included as federal liabilities. Their main reasons are:
- These benefits fit the definition of liabilities in the Financial Report of the United States Government.
- These benefits are almost identical to federal employees' accrued benefits, and federal employees' accrued benefits are included already.
- Not including these benefits underestimates the liability position of the federal government.
- These benefits are relied upon by retirees, so they are politically motivated to assure their benefits are not reduced.
Paying off this new measure of federal liabilities would take 12 years of federal revenues.
The debt held by the public tells one part of the federal liability story. Accrued retirement liabilities payable to federal payable to federal employees are another part and including Social Security and Medicare benefits payable to retirees is a further step towards completing the story.
Source: Liqun Liu, Andrew Rettenmaier and Thomas Saving, "Federal Liabilities: 2015 Update," Texas A&M University, July 2015.
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