Wednesday, 22 Dec 2010 06:52 AM
The U.S. government fell deeper into the red in
fiscal 2010 with net liabilities swelling more than $2
trillion as commitments on government debt and federal
benefits rose, a U.S. Treasury report showed Tuesday.
The Financial Report of the United States, which applies
corporate-style accrual accounting methods to
Washington, showed the government's liabilities exceeded
assets by $13.473 trillion. That compared with an
$11.456 trillion gap a year earlier.
Unlike the normal measurement of government intake of
receipts against cash outlays, accrual accounting
measures costs such as interest on the debt and federal
benefits payable when they are incurred, not when funds
are actually disbursed.
The report was instituted under former Treasury
Secretary Paul O'Neill, the first Treasury secretary in
the George W. Bush administration, to illustrate the
mounting liabilities of government entitlement programs
like Medicare, Medicaid and Social Security.
The government's net operating cost, or deficit, in the
report grew to $2.080 trillion for the year ended Sept.
30 from $1.253 trillion the prior year as spending and
liabilities increased for social programs. Actual and
anticipated revenues were roughly unchanged.
The cash budget deficit narrowed in fiscal 2010 to
$1.294 trillion from $1.417 trillion in 2009. But the
$858 billion tax cut extension package enacted last week
is expected to keep the deficit well above the $1
trillion mark for another year.
BUDGET CUT DEBATE
The latest Treasury report should fuel debate in
Congress over spending cuts next year as a new
Republican majority in the House of Representatives
takes office.
The U.S. Senate Tuesday approved a compromise bill to
fund the government until March 4, 2011. After that,
Republicans will have the chance to push through
dramatic budget cuts.
"Today, we must balance our efforts to accelerate
economic recovery and job growth in the near term with
continued efforts to address the challenges posed by the
long-term deficit outlook," U.S. Treasury Secretary
Timothy Geithner said in a letter accompanying the
report.
"The administration's top priority remains restoring
good jobs to American workers and accelerating the pace
of economic recovery."
Among key differences between the operating deficit and
the cash deficit were sharp increases in costs accrued
for veterans' compensation, government and military
employee benefits and anticipated losses at mortgage
finance giants Fannie Mae and Freddie Mac.
The biggest increase in net liabilities in fiscal 2010
stemmed from a $1.477 trillion increase in federal debt
repayment and interest obligations, largely to finance
programs to stabilize the economy and pull it out of
recession.
The federal balance sheet liabilities do not include
long-term projections for social programs such as
Medicare, Medicaid and Social Security, but these showed
a positive improvement.
The report said the present value of future net
expenditures for those now eligible to participate in
these programs over the next 75 years declined to
$43.058 trillion from $52.145 trillion a year ago — a
change attributed to the enactment of healthcare reform
legislation aimed at boosting coverage and limiting
long-term cost growth.
The overall projection, including for those under 15
years of age and not yet born, is much rosier, with the
75-year projected cost falling to $30.857 trillion from
last year's projection of $43.878 trillion.
The report noted, however, that there was "uncertainty
about whether the projected reductions in healthcare
cost growth will be fully achieved."
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