WASHINGTON – The government is promising $45 trillion more than it can deliver on Social Security, Medicare and other benefit programs.
That is the gap between the promises the government has made in benefits and the projected revenue stream for these programs over the next 75 years, the Bush administration estimated Monday.
The $45.1 trillion shortfall has increased by nearly $1 trillion in just one year, according to the administration's "Financial Report of the United States Government" for 2006. And, it's up 67.8 percent in just the past four years. In 2003, the shortfall between promised benefits and revenue sources over a 75-year period was put at $26.9 trillion.
The shortfall includes Social Security and Medicare in addition to Railroad Retirement and the Black Lung program.
When the gap in funding social insurance programs is added to other government commitments, the total shortfall as of Sept. 30 represented $53 trillion, up more than $2 trillion in just a year, the report said.
"Our government has made a whole lot of promises in the long-term that it cannot possibly keep," Comptroller General David M. Walker, the head of the Government Accountability Office, said Monday.
Members of Congress said the increase in the unfunded liability for Social Security and Medicare underscored the critical urgency to do something in light of the looming retirement in coming years of 78 million baby boomers.
"The longer we delay action on the issue of entitlement reform, the more difficult the solution will become," said Sen. Judd Gregg, the top Republican on the Senate Budget Committee.
Rep. Jim Cooper, D-Tenn., said the new report emphasized the need to enact legislation he is supporting that would create a bipartisan commission to make recommendations on overhauling benefit programs and then submit those recommendations to an up-or-down vote in Congress.
"If we don't take action now, it threatens to destroy our social safety net and ruin our economic prosperity," Cooper said in a statement.
The new report said that the federal budget deficit would have been 69 percent higher than the $162.8 billion reported two months ago if the government had used the same accounting methods as private companies. Under the accrual method of accounting, the deficit would have totaled $275.5 billion for the fiscal year ending Sept. 30.
Under the accrual method of accounting, expenses are recorded when they are incurred rather than when they are paid. That raises the costs for liabilities such as pensions and health insurance. The new report was released by the Treasury Department and the president's Office of Management and Budget.
The $275.5 billion deficit under the accrual method of accounting was still down by 38.7 percent from the deficit under this accounting method the previous year, when it totaled $449.5 billion.
The deficit on a cash-flow basis of $162.8 billion represented the lowest imbalance in five years. The administration noted the decline in the deficit under both measurements.
"The 2.6 trillion in record-breaking revenues that flowed into the Treasury this year reflect a healthy economy," Treasury Secretary Henry Paulson said in a statement accompanying the new report.
But officials warned that something must be done to address the significant shortfall in the government's largest benefit programs for Social Security and Medicare.
"Reducing the deficit in the short-term will put us in a better position for dealing with the longer-term entitlement issue, which can only be characterized as an oncoming fiscal train wreck," said OMB Director Jim Nussle.
Congress ordered the government a decade ago to start issuing annual reports using the accrual method of accounting in an effort to show the finances in a way that was comparable with the private sector.
As it has for every report, the GAO, Congress' auditing arm, said it could not sign off on the books because of problems at various agencies, most notably the Defense Department.