By Kevin G. Hall
Published: Wednesday, Apr. 24, 2013 – 5:16 pm
Last Modified: Thursday, Apr. 25, 2013 – 3:45 am
WASHINGTON — As part of a new push to broaden the way economic growth is measured, government statisticians will soon begin using a new accounting method that’s likely to spotlight the problem of underfunded pension funds, particularly those managed by state and local governments across the nation.
Sometime in July, the Bureau of Economic Analysis will revise the way it measures the nation’s gross domestic product for only the 14th time. The GDP is the sum of all goods and services produced in the U.S. economy, and the coming changes will measure differently not just pensions but everything from R&D to R&B.
The Bureau of Economic Analysis will start counting spending on research and development as fixed investment that counts toward final spending taking place in the economy. It’ll also count as fixed investment expenditures by business on entertainment, literature, theater and other forms of original art, including Motown recordings and “I Love Lucy” reruns.
Importantly, the agency will adopt a form of accounting that’ll measure pension plans using the present-day value of future benefits promised by an employer. This change, called accrual-based accounting, likely will spotlight the unfunded promises in government pension plans.
“I think the measures we (had) developed were based on old concepts and old accounting standards that just sort of measured the cash flow,” said Brent Moulton, the Bureau of Economic Analysis’ associate director of national economic accounts. “It’s now been recognized both by economists and accountants . . . that you need to take the present value of those future obligations.”
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