Federal Government’s Long-Term Liabilities Total $57.3T; Unfunded Liability for Medicare $30.4T, According to USA Today Analysis
The federal government's financial obligation to cover the lifetime benefits of people eligible for government programs increased by $2.5 trillion last year to $57.3 trillion, largely due to rising Medicare obligations, according to a USA Today analysis. According to USA Today, the $2.5 trillion increase "dwarfs" the $162 billion the federal government announced as the 2007 deficit, down from a $248 billion deficit in 2006.
The discrepancy can be attributed to the federal government not following accounting standards used by corporations and state governments that count new financial obligations, even if the payments are in the future. As a result, the federal government only calculates the cost of benefits for the current year instead of tallying the lifetime benefits for programs (Cauchon, USA Today, 5/19).
Total liability in 2007 included $12.8 trillion in Medicare Hospital Insurance, $11.7 trillion for Part B, $5.9 trillion for Part D, $1.128 trillion for disabled veterans compensation, $1 trillion for state and local retiree medical benefits, $834 billion for military retirement health benefits and $312 billion for federal retirement health benefits (USA Today graphic, 5/19). According to USA Today, Medicare currently has an unfunded liability of $30.4 trillion. USA Today reports that the "amount is sure to rise" when the oldest of the 79 million baby boomers reach age 65 and become eligible for Medicare.
According to economist Dean Baker, large liabilities are potentially misleading because future generations will have higher incomes. He said, "If we fix health care, then our deficits can be easily dealt with" (USA Today, 5/19).
