Federal liabilities far exceed federal debt
Posted by Professor Mockumental
Even if you aren’t an accountant, chances are you’ve heard the term GAAP, Generally Accepted Accounting Principles.
The U.S. Government is not required to follow GAAP and as such, it turns out the federal debt is dwarfed by actual federal liabilities.
Under those accounting practices, the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported under unique rules set by Congress.
A U.S. household’s median income is $49,445, the Census reports.
The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.
The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government’s books.
If it’s true something that can’t continue forever, won’t, how will things work out and who will be left holding the bag when the music stops?