WASHINGTON - The fiscal 2007 federal budget deficit would have been 69 percent higher than the $162.8 billion reported two months ago if the government had used the same accounting methods as private companies, the Bush administration reported yesterday.
The administration, releasing the "Financial Report of the United States Government" for 2007, said the deficit under the so-called accrual method of accounting would have totaled $275.5 billion for the fiscal year ended Sept. 30.
The report was released by the Treasury Department and the president's Office of Management and Budget. Under the accrual method of accounting, expenses are recorded when they are incurred rather than when they are paid. That raises the costs for liabilities such as pensions and health insurance.
The $275.5 billion deficit under the accrual method of accounting was still down 38.7 percent from the deficit under this accounting method the previous year, when it totaled $449.5 billion.
The deficit on a cash-flow basis of $162.8 billion represented the lowest imbalance in five years. The administration noted the decline in the deficit under both measurements.
But officials warned that something must be done to address the significant shortfall in the government's largest benefit programs for Social Security and Medicare.
"Reducing the deficit in the short-term will put us in a better position for dealing with the longer-term entitlement issue," said OMB director Jim Nussle, "which can only be characterized as an oncoming fiscal train wreck."
The new report indicates that funding for Social Security and Medicare will come up $45 trillion short in the next 75 years in paying for projected benefits over that time.