This one just won't go away Jim...the manana economists will have to work overtime to spin this one:)
Study says real US deficit is 44 trillion dollars
Thu May 29, 6:14 PM ET
WASHINGTON (AFP) - A study applying rigorous accounting standards to the US budget suggests that the true fiscal deficit -- counting long-term pension and health care liabilities -- is a whopping 44 trillion dollars.
The study by economists Jagadeesh Gokhale of the American Enterprise (news - web sites) Institute (AEI) and Kent Smetters of the University of Pennsylvania, found the fiscal imbalance includes seven trillion dollars for Social Security (news - web sites) retirement costs and 38 trillion dollars for the Medicare health program for the elderly.
The forecast, released by the AEI Thursday, uses a more rigorous accounting method than that used by the government, counting all liabilities even beyond the 75-year time frame used for budget forecasts.
The study concluded that to correct the imbalance, wage taxes would have to be hiked 16.7 percent or personal income taxes by 69.3 percent.
The study was disclosed Thursday by London's Financial Times, which said the US government shelved the report in the midst of seeking a 10-year, 350-billion dollar tax cut, which was passed by Congress last week.
President George W. Bush (news - web sites)'s administration chose to keep the findings -- commissioned by then-Treasury secretary Paul O'Neill -- out of the 2004 annual budget report, published in February, the daily reported.
Senator Bob Graham, a Florida Democrat and presidential hopeful in 2004, called the deficit projection "a staggering figure" and said it was "a great disservice" to withhold the report ahead of last week's vote on tax cuts.
Graham said lawmakers might not have voted the same way if they had seen the figures.
"If people in the Congress were faced with the reality of how serious our financial condition is ... it should have changed minds," Graham said in a conference call.
"It's irresponsible to be adding to a project deficit which ... will exceed 44 trillion dollars."
According to the Financial Times, the two economists believed the report was for inclusion in official budget documents.
"When we were conducting the study, my impression was that it was slated to appear (in the budget). At some point, the momentum builds and you think everything is a go, and then the decision came down that we weren't part of the prospective budget," Gokhale was quoted a saying in the front-page article.
The latest study adds a fresh perspective to the problem of the baby-boom generation, which is nearing retirement age.
Because the government pays pensions and health care from current revenues, it is incurring a huge long-term liability for the 71 million baby-boomers who will retire over the next 30 years, with fewer workers to pay these costs.
In February, Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) warned that the aging of the US population could have important effects on the budget if no reforms are made to the pension and health care programs.
story.news.yahoo.com |
