A second mortgage — to pay public debt

The U.S. government ran a deficit of $248 billion last year -- that it will admit to.

Though it's doubtful most Americans could cite the precise figure -- or, for that matter, that most people can easily envision precisely what a billion dollars is -- the number surfaces often enough that it now seems both customary and "right."

But what if it's not right? What if we dispense with government bookkeeping tricks that keep the obligations of the big wealth transfer schemes like Medicare and Social Security off the books by refusing to count the promises made by those programs to future retirees as "current obligations"? In other words, what if the books of the U.S. government were balanced in the same way now required of private American corporations?

The result, USA Today reported over the holiday weekend, would show the central government operating not at a $248 deficit, but with a current annual loss of $1.3 trillion.

"The loss -- equal to $11,434 per household -- is more than Americans paid in income taxes in 2006," reports Dennis Cauchon of the national daily. And that's just the amount that was added to the debt last year.

To avoid deceiving stockholders, modern accounting requires that corporations, state and local governments count expenses immediately when a transaction occurs, even if the payment isn't scheduled to be made till later.

But the federal government chooses not to follow this rule, so promises of future benefits made to those currently "paying in" to Social Security and Medicare don't show up when the government reports its financial condition.

The bottom line? Taxpayers are actually on the hook for a record $59.1 trillion in liabilities, a 2.3 percent increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of only $112,043 for mortgages, car loans, credit cards and all other debt combined.

Unfunded promises made for Medicare, Social Security and federal retirement programs account for 85 percent of those taxpayer liabilities, USA Today reports. State and local government employee retirement plans account for much of the rest.

That $516,348 is the amount each American family would have to pay today to cover the government's financial obligations. "Like a mortgage, it will cost more to repay the debt over time," USA Today reports. "Every U.S. household would have to pay about $31,000 a year" to pay off the debt in 75 years.

The Financial Accounting Standards Advisory Board 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 balance sheet instead of keeping them separate.

The White House and the Congressional Budget Office oppose that change. Their rationale for doing so should prove very interesting to younger workers who believe they are being "promised" that -- in exchange for their heavy tax burden today -- the programs "will be there for them" when they retire. The White House and the Congressional Budget Office argue "that the programs are not true liabilities because government can cancel or cut them," reports Mr. Cauchon.

If there are really no "trust funds," no obligation not to "cancel or cut" these programs by the time today's younger workers turn to them, what is it, exactly, that all those extra withholdings from our paychecks are for?