The Fiscal Cliff is Not the Real Problem

The Government balance sheet

As Washington works through the weekend to avoid the fiscal cliff, U.S. News editor-in-chief Mort Zuckerman says that the current budgetary woes (the U.S. budget deficit for fiscal 2012 was $1.1 trillion) are dwarfed by the liabilities that the U.S. government is adding each year [bold added]:

Today the estimated unfunded total is more than $87 trillion, or 550 percent of our GDP. And the debt per household is more than 10 times the median family income.

.... the real annual accrued expense of Medicare and Social Security alone is $7 trillion. The government's balance sheet does not include any of these unfunded obligations but focuses on the current year deficits and the accumulated national debt.

The government balance sheet is not only less transparent, but misleading for not including material obligations (below information obtained from 2011 GAO report) that any private-sector entity would be prosecuted for omitting.


If there's one New Year's hope that your humble observer has for public governance, it's that legislators and the public have better information to gauge the consequences of their decisions. One place to start would be in government reports that are held to the same requirements that are demanded for the rest of us. © 2012 Stephen Yuen