The federal deficit for 2008 would top $1 trillion if the government had to use the same accounting methods as private companies.

That doesn’t even account for the huge costs of the Wall Street bailout, which didn’t really start until the new budget year began on Oct. 1.

The government is promising $49 trillion more than it can deliver on Social Security, Medicare and other benefit programs over the next 75 years unless Congress steps in to shore up the system. Some combination of tax increases, benefit cuts or other policy changes is needed to stave off unsustainable deficits.

That was the finding Monday when the administration released a 188-page “Financial Report of the United States Government” for the 2006 budget year that ended on Sept. 30.

The report, released by the Treasury Department and the White House budget office, found that under the accrual method of accounting used by businesses, the deficit for 2006 would have totaled $1 trillion – not the $455 billion reported in October under the cash system of accounting.

Under the accrual method, expenses are recorded when they are incurred rather than when they are paid. That tends to raise costs for liabilities such as pensions and health insurance. The big jump in the 2008 budget year was largely due to changed calculations for the payment of veterans benefits.

The deficit is expected to top a staggering $1 trillion for the ongoing 2009 fiscal year, reflecting the costs of the Wall St. bailout, weaker tax revenues from the deepening recession and the costs of President-elect Barack Obama’s upcoming economic recovery measure.

What’s more: The report doesn’t factors in the enormous potential liabilities incurred by the Federal Reserve System over the past few months as it has tried to stabilize the financial system by taking steps like guaranteeing $306 billion worth of Citigroup troubled assets. Fed transactions aren’t reported on the government’s books.

Despite the turmoil caused by the financial crisis, the longer term liabilities facing the government are even more staggering.

Virtually every budget expert warns that the long-term costs of federal retirement programs like Social Security and Medicare are going to swamp the budget as more and more baby boomers retire.

“We must not forget the long-term needs that pose a significant threat to our economy’s fiscal sustainability,” said Treasury Secretary Henry Paulson. “Changes are needed to ensure these programs are fiscally sustainable.”

“It is without question that we face extraordinary challenges in our financial markets and the larger economy,” said White House budget chief Jim Nussle. “As a result, the bottom-line budget results in the short-term are sobering.”

The fiscal results also amplify President George W. Bush’s record on the deficit. Virtually every administration promise on the deficit has failed to come to pass.

Bush hands President-elect Barack Obama a government in bad fiscal shape, but Obama’s unlikely to tackle the deficit until an economic recovery begins.

Bush inherited a budget seen as producing endless huge surpluses after four straight years in positive territory. That stretch of surpluses represented a period when the country’s finances had been bolstered by a 10-year period of uninterrupted economic growth, the longest expansion in U.S. history.

Twelve years ago, Congress ordered the government to start issuing annual reports using the accrual method of accounting in an effort to show the finances in a way that was comparable with the private sector.

On the Web:

Annual financial report: http://www.fms.treas.gov/fr/index.html.