The recent U.S. government shutdown has brought disagreements over U.S. government fiscal policy to public attention. These discussions focus most often on the short term imbalances between government revenues and expenditures known as the budget deficit. As the deficit has increased both in nominal terms and as a fraction of GDP, more people are looking at the sustainability of the situation or the longer term picture. Given that retirement programs, such as Social Security and Medicare, are

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... coming larger determinants of both the short term and long term imbalances, increasing attention is being drawn to the actuarial concepts of unfunded liabilities. The long term imbalances are derived from projections of the short term imbalances over time using actuarial methods. This article will explain the concept of unfunded liability and analyze the contribution of Medicare to this long term problem. The U.S. budget deficit is a number reflecting the short term imbalances between government revenues and expenditures over a one year time period.