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Cleaning up nuclear contamination costs a lot of money – and the costs are mushrooming

September 10, 2020

The federal budget gets a lot of attention, while the federal government’s annual financial report with audited financial statements goes widely ignored. People who care about how the government plans to spend our money apparently outnumber the people who care about how the government accounts for its spending.

The budget deficit does get attention, with estimated amounts widely reported. But the annual financial report includes a valuable companion – something called “net operating cost.” The widely-reported budget deficit is based on cash-like accounting principles, while net operating costs add significant incurred (and accruing) expenses that don’t involve cash currently going out the door -- posing future consequences. 

The federal government’s net operating cost significantly exceeds the budget deficit. In 2018, when the budget deficit was reported at $779 billion (negative), the net operating cost ran nearly 50 percent higher, at $1.2 trillion. The net operating cost then rose 25 percent – to nearly $1.5 trillion – in 2019. 

What accounts for the difference between the net operating cost and the budget deficit? The annual financial report cites non-cash changes in three main liabilities – employee and veteran benefits payable, insurance and guarantee program liabilities, and “environmental and disposal liabilities.” 

Let’s take a peek at those environmental and disposal liabilities – in total, not in the annual (non-cash) change in the estimated debt. 

What’s in this stuff? Lots and lots of icky things that entail future cleanup costs, primarily for environmental contamination relating to nuclear weapons testing dating back to World War II. At almost $600 billion in 2019, the dollar amount has nearly doubled since 2010.

And the $600 billion might be viewed as a lowball estimate, in light of the following cautionary note in how the government explains how it accounts for this liability: “Where technology does not exist to clean up radioactive or hazardous waste, only the estimable portion of the liability (typically monitoring and safe containment) is recorded.”

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