USA Inc.’s financials are discouraging

By the standards of any public corporation, USA Inc.’s financials are discouraging.
Created and Compiled by Mary Meeker
February 2011

A Inc.is a non-partisan report that looks at the U.S. federal government (and its financials) as if it were a business. Mary Meeker, partner at KPCB and former financial analyst at Morgan Stanley, created and compiled the report with the goal of informing the discussion about our financial situation and outlook. USA Inc. examines the country’s income statement and balance sheet, aiming to interpret the underlying data and facts, and illustrate patterns and trends in easy-to-understand ways. The report also analyzes the drivers of federal revenue and the history of expense growth, and discusses basic scenarios for how revenue and expense growth might change to help America move toward positive cash flow.

True, USA Inc. has many fundamental strengths. On an operating basis (excluding Medicare
and Medicaid spending and one-time charges), the federal government’s profit & loss statement
is solid, with a 4% median net margin over the last 15 years. But cash flow is deep in the red (by almost $1.3 trillion last year, or -$11,000 per household), and USA Inc.’s net worth is negative and deteriorating. That net worth figure includes the present value of unfunded entitlement liabilities but not hard-to-value assets such as natural resources, the power to tax or mint currency, or what Treasury calls “heritage” or “stewardship assets” like national parks.
Nevertheless, the trends are clear, and critical warning signs are evident in nearly every data
point we examine.

USA Inc. - A Basic Summary of America's Financial Statements