Government accounting shakeup?

Ashley Milne-Tyte Oct 23, 2006

TEXT OF STORY

LISA NAPOLI: Get ready for a sweeping new proposal for government accounting rules. So says The Financial Times. It’s reporting that the Federal Accounting Standards Advisory Board wants a major shakeup of the way the government accounts for entitlement programs like Social Security and Medicare. Ashley Milne-Tyte reports the administration is not eager to adopt it.


ASHLEY MILNE-TYTE: The new rule proposes that as Americans build up entitlements to future benefits year by year, the government makes an accounting of those accruing benefits.

If the rule went into effect, it would make the U.S. budget deficit look a lot larger than it does now.

But Krishna Guha of the Financial Times says that’s not the administration’s only concern. They’re also worried . . .

KRISHNA GUHA:” . . . that if you actually make financial provisions for these benefits today, you in effect suggest that these schemes are set in stone, and that the government will be obliged many years from now to make payouts based on the current rules of the system.”

He says they fear the rule would undermine efforts to make Social Security and Medicare more viable for the long term.

There will be public hearings on the rule in the spring.

In New York, I’m Ashley Milne-Tyte for Marketplace.

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