Taxpayers on the hook for $59 trillion

Taxpayers on the hook for $59 trillion

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Enlarge By Alex Wong, Getty Images Sens. Dianne Feinstein, D-Calif., and Pete Domenici, R-N.M., have introduced a bill to create a permanent commission to make recommendations on maintaining long-term financial stability for the Social Security and Medicare entitlement programs. The government recorded a $1.3 trillion loss last year, a USA TODAY analysis shows. BALANCE DUE The cost per U.S. household of unfunded promises made by federal, state and local government: Medicare $255,280 Social Security $144,251 Federal debt $43,380 Military benefits $25,863 State and local debt $17,537 Federal civil- servant benefits $14,374 State and local retiree benefits $13,114 Other federal obligations $2,548 Total $516,348 Source: USA TODAY research; numbers rounded

By Dennis Cauchon, USA TODAY

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, a USA TODAY analysis shows.

The loss reflects a continued deterioration in the finances of Social Security and government retirement programs for civil servants and military personnel. The loss — equal to $11,434 per household — is more than Americans paid in income taxes in 2006.

"We're on an unsustainable path and doing a great disservice to future generations," says Chris Chocola, a former Republican member of Congress from Indiana and corporate chief executive who is pushing for more accurate federal accounting.

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.

FIND MORE STORIES IN: Social Security | Medicare | Getty | Taxpayers | Pete Domenici | Alex Wong

Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. 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% of taxpayer liabilities. 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.

The Financial Accounting Standards Advisory Board, which sets federal accounting standards, is considering requiring the government to adopt accounting rules similar to those for corporations. The change would move Social Security and Medicare onto the government's income statement and balance sheet, instead of keeping them separate.

The White House and the Congressional Budget Office oppose the change, arguing that the programs are not true liabilities because government can cancel or cut them.

Chad Stone, chief economist at the liberal Center on Budget and Policy Priorities, says it can be misleading to focus on the government's unfunded liabilities because Medicare's financial problems overwhelm the analysis.

"There is a shortfall in Medicare and Medicaid that is potentially explosive, but that is related to overall trends in health care spending," he says.