If Paul Ryan’s and Michele Bachmann’s warning-klaxons’ responses weren’t enough to scare you, Tom Blumer took apart in his latest Pajamas Media column the 2010 Financial Report of the United States Government. I could focus on the after-TARP-tricks (explained in the column) cash deficit of $1.41 trillion in 2010 (with 2009’s adjusted downward by a like amount to $1.30 trillion), or the $2.08 trillion (after a $0.13 trillion worsening adjustment in changes of assumptions related to long-term assumptions on federal employee retirement benefits) net operating cost (GAAP) deficit, or the fact that, for each of the 14 years the report was to be produced to GAAP standards, the Government Accountability Office could not sign off on it. However, since I’ve somehow become a SocSecurity “watcher”, I’ll focus on that:
How about Social Security and Medicare? Well, there’s bad news and, as is often the case with this bunch, pretend good news. The bad news, as seen here, is that the government’s actuarial liability for Social Security jumped by $270 billion in fiscal 2010 to almost $8 trillion. The program now runs at a deficit during most months. Without changes, Social Security will hemorrhage cash at an ever-increasing rate in the coming years.
But, but, but I thought the Trustees said SocSecurity’s position was “improved” relative to taxable payroll because PlaceboCare will force employers to offer more wages instead of health insurance. That leads me to the Medicare part…
As to Medicare, the government claims at that same link that its actuarial liability for that program decreased by $15.3 trillion, a stunning turnaround it attributes to the passage of ObamaCare. Here what the GAO had to say about that assertion:
Significant uncertainties [...] primarily related to the achievement of projected reductions in Medicare cost growth reflected in the 2010 Statement of Social Insurance, prevented us from expressing an opinion on that statement.
That’s polite accounting-speak for: “Though we can’t prove it, we think it’s a load of rubbish.”
Which raises the question of whether the 75-year actuarial deficit in Social Security should only have gone up by $270 billion. I should note that the GAO actuarial deficit does not include any “trust fund” operations as the money does not exist (yet).
As for the cash deficits, the latest CBO “The Budget and Economic Outlook” (released today) now projects that the combined OASDI funds will not return to anything approaching cash surpluses, though the OASI fund will have a very-minimal (under $10 billion) cash surplus between 2012 (or perhaps 2013; the chart is unclear) and 2015.
I’m still digesting the larger report, but there’s two more things to note right now – if current laws, levels of taxation and levels of spending continue/increase/decrease/end as scheduled, the FY2009-FY2012 deficits will be $5.3 trillion (with $1.5 trillion projected for this fiscal year and $1.1 trillion projected for FY2012), and total debt will eclipse the Gross Domestic Product no later than 2017.