The federal government does do a calculation of the federal debt based on accrual accounting, but it appears in an obscure Treasury Department publication called the Financial Report of the United States Government. (It can be found at http://www.fms.treas.gov.) The latest appeared on Dec. 15, and Bush did not call a press conference to announce the results.
The Financial Report presents a complete balance sheet for the federal government, listing all its assets and liabilities, including those that have accrued and will be incurred in future years under current law. It says at the end of FY 2006 the federal government had a net operating cost of minus $449 billion, much worse than the $248 billion deficit Bush announced. The larger figure results from the inclusion of various budgetary items, such as asset depreciation, that are left out of the published budget.
The Financial Report also shows that the true public debt at the end of FY 2006 was not the published figure of $4.6 trillion, but almost twice that -- $8.9 trillion -- when liabilities for federal employees and veterans' benefits and other items are included.
But even this larger figure does not represent the government's total indebtedness because it leaves out Social Security and Medicare, which have projected costs far in excess of projected revenues. Over the next 75 years, these two programs have an unfunded liability of $44 trillion -- $15 trillion for Social Security and another $29 trillion for Medicare.
What is really frightening is that Bush apparently has no clue that the problems of Medicare are twice as bad as Social Security's and getting worse at a much faster rate. At the end of FY 2002, Social Security's unfunded liability was $11 trillion and Medicare's was just $13 trillion. Today, Social Security is a little worse, but Medicare is much, much worse.
Yet over and over again, Bush has said we must fix Social Security -- even if we have to raise taxes -- while saying nothing about the way Medicare is hemorrhaging money. He can't because his massive, unfunded program for prescription drugs in 2003 is the principal reason why Medicare's financial problems have gotten so much worse since 2002.
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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