New rules would paint uglier deficit picture
The National Debt Clock in Manhattan shows the total U.S. government debt.
KAI RYSSDAL: There's this promise we all make with the government. Work hard, contribute to Social Security, and it'll be there for you when you need it. But how much might all those promises cost the Feds? Currently the U.S, like the rest of the world, only puts the debts on the books at the time they're payable to retirees. That doesn't give such a clear picture of the liabilities. So today the board that keeps an eye on accounting for the accountants proposed a change. Marketplace's Hillary Wicai reports.
HILLARY WICAI: The Federal Accounting Standards Advisory Board is all about transparency. They want a car, if you will, with a crystal-clear windshield. That way, while on the highway to the land of Social Security, wwe'll be sure to see road signs like "CAUTION! Bridge out!"
The controversy comes when you start talking about just how much cleaning the windshield needs and how far you ought to be able to see. One idea: put those social insurance liablitiies on the books now, not when they come due. David Mosso is chairman of the board and likes the idea.
DAVID MOSSO:"On an ongoing basis it gives you a better idea of what the programs are costing. So that in itself is a good policymaking tool."
Our books sure would look different. Mosso says the debt side of our balance sheet would increase by trillions! But Comptroller General of the U.S. David Walker says it's a terrible idea. The Administration's working to change social programs like Social Security, which means once we get around the bend the road is sure to look a lot different. Walker says that goes for Medicare too.
DAVID WALKER:"There is no question that Medicare is going to have to be dramatically and fundamentally reformed. And to record something that reflects a number inconsistent with that is not only inappropriate, but it's misleading."
And, Walker says, bad numbers could lead to bad policy making. Hearings on the board's preliminary views will begin this spring. The board isn't likely to propose a final draft until 2007.
In Washington, I'm Hillary Wicai for Marketplace.