Each US Household Owes $500,000 For Government Benefits -Report

NEW YORK -(Dow Jones)- Taxpayers owe more than $500,000 per household for financial promises made by government, mostly to cover the cost of retirement benefits for baby boomers, USA Today reported, citing its own analysis.

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, said the report late Wednesday.

That is the equivalent of $510,678 for every household in the U.S., said USA Today.

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

"This is a monster financial problem that both parties are going to have to solve," says Rep. Jim Cooper, 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."

The report said government obligations for U.S. citizens 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 aside 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.

The balance, the newspaper said, grows about $25,000 per household annually. Taxpayer liabilities grew 20% in the past two years, 13% above the inflation rate.

The report said the increase is due to the following:

-Medicare - the health care program for the elderly saw its long-term deficit grow $4.5 trillion from 2004 on higher medical costs and an aging population.

-Social Security - the deficit for workers and beneficiaries already in the system grew $2.5 trillion over two years because each generation gets benefits greater than the last, automatically putting the program more out of balance every year.

-Government retirement 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," Ed Lorenzen, policy director at the Concord Coalition, which promotes fiscal responsibility, told the newspaper.

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 said, the newspaper reported.

Newspaper Web site: usatoday.com

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