The US government reported $7.2 trillion in “federal employee and veteran benefits payable” in its most recent annual financial report, increasing more than $400 billion from 2015.
The main factor in this increase? Pencils with erasers.
The Department of Veterans Affairs changed the assumptions used to calculate veteran compensation and burial benefits, leading to a massive $378 billion loss included in the main federal income statement.
To calculate these liabilities, the government has to make assumptions about future developments like the number of veterans, their compensation, mortality rates, and the number of beneficiaries. The staggering recalculation was driven importantly by, in the words of the Department of Veterans Affairs …
“One major assumption change was for the projected average growth in Compensation counts, which was updated to reflect the increase of new Compensation cases over the last five years and resulted in an increase to costs of $276.6 billion. Another assumption change which significantly contributed to the overall increase was for new mortality rates and mortality improvement factors, increasing costs by $44.5 billion.”
This development serves as a healthy reminder that total “defense” costs are not completely reported by the Defense Department’s results (the Department of Veterans Affairs is reported separately). And it looks like things are a lot more costly than we were previously told.