Boosting the size of the liability was the enactment of the National Defense Authorization Act by Congress last year to expand benefits for military retirees, causing the government’s future obligations to federal employees and veterans to rise some $300 billion in fiscal 2001, according to Reuters.
Caught in the same demographic cross hairs confronting many employers in the private sector, the government report noted that while it disbursed $624 million for the new benefits in fiscal 2001, it is expected that in a decade, payments will reach $8 billion. Furthermore, funding of these new benefits will last for as long as federal employees retire, an official from the White House’s Office of Management and Budget (OMB) told reporters, according to the Reuters report.
The report, which incorporated the latest data from the Social Security Trustee’s report, forecast that benefit payments will exceed receipts starting in 2017 and that the trust fund will be exhausted in 2041.
The government reported that total revenue in FY2001 fell by $31.1 billion because of lower corporate income tax receipts caused by the economic downturn that followed the September 11 terrorist attacks. Additionally, the government deficit widened to $514.8 billion in FY2001, a dramatic downturn from a $39.6 billion surplus the previous year.
Of course, the increase wasn’t strictly a function of increasing benefit obligations. Since 1998, the government has reduced the debt held by the public by some $400 billion.
In releasing the report, the Treasury Department noted the report provides ‘a more complete depiction of the government’s finances’ than the annual budget does, since it highlights future liabilities. And, while the report comes six months after the end of the government’s September 30 fiscal year end, Treasury Secretary Paul O’Neill says he wants to shorten that delay by half.
The report also lacks the sanction of the General Accounting Office, which, for the fourth year in a row, says it is unable to express an opinion on the reliability of the government’s annual financial statement because of ‘material weaknesses in internal control and accounting and reporting issues.’