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Taxpayers owe more than a half-million dollars per household for financial promises made by government
Yahoo News/USA Today
By Dennis Cauchon
May 25, 2006

Taxpayers owe more than a half-million dollars per household for financial promises made by government, mostly to cover the cost of retirement benefits for baby boomers, a USA TODAY analysis shows.

Federal, state and local governments have added nearly $10 trillion to taxpayer liabilities in the past two years, bringing the total of government's unfunded obligations to an unprecedented $57.8 trillion.

That is the equivalent of a $510,678 credit card debt for every American household. Payments on this delinquent tax bill must start soon if financial promises to the elderly are to be kept.

The cost of retirement programs will start to soar when baby boomers - 79 million born between 1946 and 1964 - begin collecting
Social Security in 2008 and Medicare in 2011.

"This is a monster financial problem that both parties are going to have to solve," says Rep. Jim Cooper (news, bio, voting record), D-Tenn., a member of the House Budget Committee. "Most Americans and Congress members don't realize the terrific burden we are putting on future generations."

USA TODAY compiled a list of all taxpayer liabilities - federal, state and local - to provide a fuller look at the nation's financial condition. The numbers are based on official government reports.

Americans' government obligations are five times what people owe for mortgages, car loans, credit cards and other personal debt. The $57.8 trillion liability is the amount that government needs now, stashed away and earning interest, to generate enough cash to pay future obligations. The obligations are valued in today's dollars and come due as early as in a few days, when Treasury bills mature, to as long as 75 years for Social Security and Medicare.

Like an unpaid credit card bill, the balance grows every year - about $25,000 per household annually.

Taxpayer liabilities grew 20% in the past two years, 13% above the inflation rate.

What's behind the increase:

•Medicare. The health care program for the elderly saw its long-term deficit grow $4.5 trillion from 2004. The causes: higher medical costs and an aging population. Not a factor: the new Medicare prescription drug benefit. It was included in the 2004 number.

• Social Security. The program's deficit for workers and beneficiaries already in the system grew $2.5 trillion over two years. Reason: Each generation gets benefits greater than the last, so the program automatically gets more out of balance every year.

• Government retirement benefits. Pension and retiree medical benefits for civil servants and military personnel are more generous than those for private-sector workers. But government has not set aside as much money as private companies to pay the costs.

"These numbers show our long-term financial problems are even greater than our short-term ones," says Ed Lorenzen, policy director at the Concord Coalition, which promotes fiscal responsibility.

Economist Dean Baker of the liberal Center for Economic Policy Research says the nation can afford Social Security but not the current health care system. "If we don't fix health care, it's hard to imagine what our country looks like in 20 years," he says.

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