The Peter G. Peterson Foundation’s Solutions Initiative 2024 deserves recognition for elevating the national conversation around fiscal sustainability. Bringing together diverse think tanks showcases a spectrum of ideas for tackling deficits and reducing debt. Yet despite its breadth, the Initiative fails to address a foundational issue: the truth about our government’s financial condition.
All of the featured policy solutions rely on Congressional Budget Office projections that use outdated cash-based accounting methods. These methods dramatically understate the magnitude and growth in the federal government’s liabilities by ignoring trillions in unfunded Social Security and Medicare obligations—commitments that are already set in stone for the future.
At Truth in Accounting, we apply full accrual accounting—the same standard corporations use. This approach reveals the real cost of federal operations by recording expenses when obligations are made, not when they’re paid. If used at the federal level, it would expose a much deeper financial hole. Instead of a $36 trillion national debt, the public would see the federal government owes over $160 trillion, including unfunded entitlements.
Unfortunately, none of the proposals in the Solutions Initiative 2024 recommend adopting full accrual accounting or publishing a complete balance sheet of the federal government’s assets and liabilities. This ommission prevents Americans from seeing the government’s true financial position—and from holding policymakers accountable for it.
Moreover, while the Initiative highlights debt held by the public and the debt-to-GDP ratio as key indicators of fiscal health, the debt portion of that ratio must reflect the full extent of the government’s financial obligations. By ignoring the debt related to promised Social Security and Medicare benefits, it results in a misleading analysis of the nation’s finances.
Fiscal responsibility begins with fiscal honesty. The only way to restore trust in government finances is to provide citizens with truthful, timely, and transparent data. Until think tanks and government leaders commit to accounting reforms that meet this standard, even the most well-intentioned budget plans will rest on a foundation of illusion.
If we want real solutions, we must start with real numbers. Join us at Truth in Accounting in demanding financial transparency from our leaders.