© Royalty-free/Vol. 70/Corbis

Policymakers and other observers have expressed concern about the federal government's current and future liabilities and commitments as the aging of the U.S. population brings demographic pressures to bear on the major federal retirement programs. Reflecting those concerns, the Concurrent Resolution on the Budget for Fiscal Year 2004 included a provision directing the Congressional Budget Office (CBO), in consultation with the Senate Budget Committee, to prepare a report presenting estimates of the current and future costs of federal programs, as well as estimates of the contingent liabilities of some of those programs and of the government's unfunded liabilities. This paper responds to that provision, explaining financial accounting and other approaches to measuring the federal government's fiscal position and describing the strengths and weaknesses of those alternatives. In keeping with CBO's mandate to provide objective, impartial analysis, the paper makes no recommendations.

Many analysts contributed to the report. David Torregrosa and Marvin Phaup of CBO's Microeconomic and Financial Studies Division coordinated its preparation, with contributions from Deborah Lucas of Northwestern University and CBO's Elizabeth Robinson and Robert Sunshine. Roger Hitchner provided direction, and Douglas Hamilton offered helpful comments. In addition, Paul Burnham, Kim Cawley, Paul Cullinan, Sandy Davis, Heywood Fleisig, Peter Fontaine, Geoffrey Gerhardt, Kathleen Gramp, Arlene Holen, Noah Meyerson, Sam Papenfuss, John Sabelhaus, Eric Schatten, Michael Simpson, and Thomas Woodward, all of CBO, made useful suggestions, as did Dave Koitz, John Sturrock, and Eric Wang, who have since left CBO. Jim Patton of the University of Pittsburgh and a member of the Federal Accounting Standards Advisory Board (FASAB); Robert Bramlett and Wendolyn Comes, also of FASAB; Glenn Follette of the Federal Reserve Board; Robert Kilpatrick of the Office of Management and Budget; Ron Feldman of the Minneapolis Federal Reserve; and Allan Lund of the Department of the Treasury's Financial Management Service (FMS) reviewed several drafts. Colleen Graham of the FMS and Jagadeesh Gokhale of the CATO Institute supplied some of the data.

Leah Mazade edited the report, and Christine Bogusz and John Skeen proofread it. Rae Roy typed early drafts of the text. Maureen Costantino prepared the report for publication and designed the cover. Lenny Skutnik produced the printed copies, and Annette Kalicki prepared the electronic versions for CBO's Web site.

Douglas Holtz-Eakin
Director
August 2004