USA Today ran a front page story Tuesday discussing one manifestation of the federal government’s accounting magic:
The federal government recorded a $1.3 trillion loss last year - far more than the official $248 billion deficit - when corporate-style accounting standards are used, a USA TODAY analysis shows.[...]
Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.[...]
This hidden debt is the amount taxpayers would have to pay immediately to cover government’s financial obligations. Like a mortgage, it will cost more to repay the debt over time. Every U.S. household would have to pay about $31,000 a year to do so in 75 years.
The Financial Accounting Standards Advisory Board, which sets federal accounting standards, is considering requiring the government to adopt accounting rules similar to those for corporations. The change would move Social Security and Medicare onto the government’s income statement and balance sheet, instead of keeping them separate.
That the federal government does its bookkeeping using rules that differ from the rest of the country’s standards is not news. However, it’s good to see a major newspaper point out the difference, and the magnitude of the real debt level, on its front page.
I’d hate to be the President or sitting on the majority’s side of the aisle in Congress if/when FASB forces the change. However, I wouldn’t be surprised if there were executive or legislative intervention against any such shift.