Holding the U.S. government accountable for Social security.

The federal government may soon have to report on the general welfare and long-term viability of the U.S. social insurance system. According to a proposed statement of the Federal Accounting Standards Advisory Board (FASAB), U.S. government financial reports should show whether social insurance

Many Americans who pay into Social Security every year have voiced their concerns that the Social Security fund will be exhausted when they need it for retirement. Congress and the White House have responded by placing the solvency of such programs at the top of their list of high-priority agenda items. According to the FASAB proposal, Accounting for Social Insurance, fundamental disclosures about the programs--including Social Security, Medicare, railroad retirement benefits, black lung benefits and unemployment insurance--should be provided to taxpayers and policy makers for long-term planning.

Understanding social programs

To make these programs more transparent, the FASAB recommends that federal reports be required to

* Recognize on the balance sheet a liability when benefits are due and payable to beneficiaries or service providers at the end of each fiscal year.

* Disclose stewardship information in a supplemental statement that includes long-range cash-flow projections and long-range projections of the ratio of workers paying taxes earmarked for the program to program beneficiaries. The supplement also should include an estimate of the amount future program participants would have to pay into the fund to cover the future benefits of taxpayers already participating in the program. Alan Greenspan, chairman of the Board of Governors of the Federal Reserve System, called this amount the "implicit liability" of social insurance programs.

"We want to help taxpayers and policy makers assess the sustainability of these social insurance programs," said David Mosso, chairman of the FASAB. "These proposed requirements should help them do that."

The statement's provisions would be effective for periods after September 30, 1998. Comments are due by June 20. For copies of Accounting for Social Insurance, call the FASAB at 202-512-7350 or visit the FASAB Web site at www.financenet.gov/fasab.htm.