Chapter 30, Problem 6MCQ

To determine

The correct option regarding the nature and recordings of United States implicit liabilities.

Explanation of Solution

Despite not being reflected in the regular debt figures, implicit liabilities are basically debts since they represent expenditure commitments made by administrations. The biggest implicit liabilities for the American government come from Social Security and Medicare, two transfer programs that primarily help elderly citizens. Low-income households gain from Medicaid, the third-largest implicit burden. The government has each time pledged to provide transfer payments to both present and future recipients. Therefore, even if the debt is not now shown in the typical statistics, these initiatives still constitute a future obligation that must be paid. Currently, these three programs make for about 40% of all government spending.

Thus, from the above we can conclude that the correct option is D.