Saturday, May 06, 2023

Federal Government’s Financial Condition Worsened by $12.7 Trillion in 2022

From Truth in Accounting, April 19, 2023- A new analysis of the latest Financial Report of the U. S. Government found that the federal government’s overall financial condition worsened by $12.7 trillion in 2022. While this financial report provides a clearer picture of the government’s financial information than the annual budget referenced in the president's State of the Union address, Truth in Accounting believes this report is incomplete.  For example, while the 2022 reported budget deficit was $1.4 trillion, this audited financial report indicated the federal government had a $4.2 trillion deficit, which is called a net operating cost in the report. The report also indicates the federal government only owes Social Security and Medicare beneficiaries $207.8 billion. Truth in Accounting believes that the federal financial report should include a Social Security liability of $47.7 trillion and a Medicare liability of $64.3 trillion, which are the benefits to be paid over the next 75 years minus the related taxes collected. 

Unknown to most people, the federal government does not believe it owes any beneficiary any Social Security and Medicare benefits beyond the checks that are about to be written. That is why the Treasury Department only included $207.8 billion of Social Security and Medicare liabilities on the federal balance sheet. According to government documents, recipients do not have the right to any benefits beyond those currently due. Laws to reduce or stop future benefits can be passed at any time. 

Proper accounting records a liability if it is probable the amounts will be paid, and the amounts are estimable. Truth in Accounting believes it is probable that the government will pay the promised Social Security and Medicare benefits, and the Social Security and Medicare trustees estimate the amount of the benefits to be paid. 

Government officials have made repeated financial decisions that have left the federal government with a debt burden of $146 trillion, including unfunded Social Security and Medicare promises. That equates to an $880,000 burden for every federal taxpayer. Because the federal government would need such a vast amount of taxpayer money to cover this debt, it received an “F” grade for its financial condition. 

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