Bush Opposes Plan To Accurately Reflect Fiscal Deficit Due To Entitlement Benefits

US welfare system faces accounting overhaul

By Krishna Guha in Washington

Published: October 22 2006 22:17 | Last updated: October 22 2006 22:17

A radical new approach to government accounting that would require the US administration to account for the cost of future social security payments year by year as people build up entitlements will be proposed on Monday.

The proposal by the federal accounting standards advisory board (FASAB) – which would also require the government to account for benefits accrued under Medicare and other social insurance programmes in the same way – is unprecedented internationally. It would radically change the presentation of US government finances, in effect bringing forward the cost of rapidly increasing social security and Medicare obligations and greatly increasing the reported fiscal deficit.

George W. Bush’s administration is firmly opposed to the proposal, which officials believe wrongly implies that the government is contractually obliged to make future payments based on current benefit rules.