U.S. "Real" Deficit
It is my contention that U.S. Government accounting should be including the annual increase in Present Value of the unfunded liabilities (for entitlements) in our current period budget and financial statements, i.e. we should be using GAAP-basis accounting. I have used the Comeback America Initiative calculation of $10 Million per minute as the rate of increase for the Financial Burden in my analysis on this website which comes to $5.3 Trillion per year. This Burden increase includes the currently reported deficit (cash deficit) of nominally $1 Trillion so the increase in present value of annual accrued liabilities is estimated by the Comeback America Initiative to be $4.3T. Cox and Archer, in a Nov 26, 2012 WSJ article, ( also see http://online.wsj.com/article/SB10001424127887323353204578127374039087636.html) present an analysis that concludes that the Government reported deficit is less than one fifth of the "real" deficit which is essentially the same as the Comeback America Inititiave assessment. Shadowstats.com reports the GAAP-basis deficit for fiscal year 2012 at $6.6 Trillion.
What this means to me is that the "Real" Deficit for the U.S. Government is on order the $5.3 Trillion that the Comeback America Initiative refers to as the annual increase in the National Burden. The Government requires that both nonprofit and for-profit entities prefund their future pension and healthcare commitment funds consistent with expected rates of return for these funds and to report the status of these funds in their financial disclosures. The Federal Government itself just chooses to ignore its own rules. The reason is that it would be impossible to collect enough tax revenue to meet the prefunding requirements (Cox and Archer demonstrate why this is impossible in their WSJ article).
This method of (miss) accounting has been going on since fiscal year 1969 when LBJ created the "Unified Budget" and has now accumulated the $55.4 Trillion present value of unfunded liabilities (the Cox and Archer article noted above concludes that these unfunded liabilities are even larger). We should have been funding these trust funds year by year so that the money would be available as required for future payouts but it is not affordable in current year budgets and certainly will not be affordable when the entitlement payouts come due.
The Federal Burden as defined by the Comeback America Initiative is therefore a running estimate of our total financial commitments; our "Real" National Debt (http://keepingamericagreat.org/10-million-a-minute-tour/).
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