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US government long-term promises top $46 trillion
Reuters
March 1, 2006

WASHINGTON, March 1 (Reuters) - As lawmakers prepare to raise the $8.18 trillion U.S. borrowing limit, a congressional agency on Wednesday warned that when promised government health and retirement benefits are taken into account the long-term obligations top $46 trillion.

David Walker, who heads the U.S. Government Accountability Office, told a House subcommittee that number represents present value of long-term promises made for Social Security retirement as well as Medicare health programs for the elderly and other government promised benefits including those for veterans.

"Given these and other factors, a fundamental re-examination of major spending programs, tax policies and government priorities will be important and necessary to put us on a prudent and sustainable fiscal path," Walker said in testimony to a House Government Reform subcommittee.

"We need to be more truthful about where we are and where we are headed," Walker said.

He said spending cuts alone, a path favored by President George W. Bush and his Republican allies in Congress, will not address the country's long-term fiscal imbalance.

The U.S. Treasury is already bumping up against a $8.18 trillion credit limit and has asked Congress to quickly raise the ceiling so the government can borrow more money and pay its bills.

The politically unpalatable move has been put off until mid-March, forcing the Treasury to juggle its accounts in order to avoid default.

Walker said one of the biggest unknown costs facing the government as the 77 million-strong baby boom generation retires is health-care costs and Medicare, particularly in light of the new drug benefit going into effect this year.

"I think you are going to have an extremely difficult time delivering on this promise over time," Walker said.

Congress recently enacted $39 billion in spending cuts, including health-care cuts, over five years and are currently negotiating a $70 billion tax-cut package.

On Wednesday, Senate Budget Committee Chairman Judd Gregg, a New Hampshire Republican, said he would like to pursue additional cuts to Medicare of about $35 billion during this year's budget process. He acknowledged it will be difficult given this year's congressional elections.

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