The numbers underreport the severity of the U.S. government’s fiscal circumstance. Even as reported, though, the numbers are not just unsustainable, they remain uncontainable. Taxes cannot be raised enough to put the annual results in the black, and the level of program slashing needed in Social Security, Medicare, etc. to reduce costs appears to be well beyond the scope of any foreseeable political will in Washington.

Unfortunately, with Treasury Secretary Timothy Geithner’s cover letter sounding like it was drafted by one of President Obama’s speech writers, the 2009 Financial Report of the U.S. Government appears to have entered the realm of political expediency, reflecting accounting that might be considered questionable if it were used in the private sector. The relatively "positive" 2009 results reflected capitalization of much of the government’s bailout efforts, a late "profit" from TARP, questionable handling of some post-fiscal year liabilities and changes in actuarial assumptions.     

Consider the report’s covering Statement of the Comptroller of the United States, the overseeing accounting authority, where "material" questions are raised in terms of the valuation of the bailout liabilities and assets. Per Gene L. Dodaro, Acting Comptroller General:

"The economic recession and the federal government’s unprecedented actions intended to stabilize the financial markets and to promote economic recovery have significantly affected the federal government’s financial condition. The resulting substantial investments and increases in liabilities, net operating cost, the unified budget deficit, and debt held by the public are reported in the U.S. government’s consolidated financial statements for fiscal year 2009. Because the valuation of these assets and liabilities is based on assumptions and estimates that are inherently subject to substantial uncertainty arising from the uniqueness of certain transactions and the likelihood of future changes in general economic, regulatory, and market conditions, actual results may be materially different from the reported amounts. Further, the ultimate cost of these actions and their impact on the federal government’s financial condition will not be known for some time."

Where the SGS Table Numbers Come from. All numbers are for the indicated fiscal year (ended September 30th), in either billions or trillions of dollars as shown.

Formal Cash-Based Deficit (1) –headline deficit number from page xiii of the 2009 report, "Nation by the Numbers Table," hereinafter referred to as NBN, line: "Unified Budget Deficit."

GAAP ex-SS Etc. Deficit (2) – euphemistically referred to as "Net Operating Cost" in NBN. It excludes social insurance unfunded liabilities.

GAAP with SS Etc. Deficit (3) — previous number (2) plus year-to-year change in the net present value of social insurance unfunded liabilities, which comes from NBN line "Closed Group" under "Statement of Social Insurance," 2009 minus 2008. The "Closed Group" is used here as it has been the preferred measure used in earlier government statements.

GAAP Federal Negative Net Worth (4) — "Total net position" from "Balance Sheets" on age 49 of the 2009 report, plus the 2009 "Closed Group" total net present value unfunded liabilities of social insurance from NBN.

Gross Federal Debt (5) –from "Note 14. Federal Debt …" pages 87-89 of the 2009 report. Total held by public (p. 87) plus Total intragovernmental (p. 89)

Total Federal Obligations (6) –Total liabilities from "Balance Sheets" on age 49 of the 2009 report, plus the 2009 "Closed Group" total net present value unfunded liabilities of social insurance from NBN, plus total intragovernmental debt from (p. 89) of the 2009 report.

Please Note: A significant expansion of this Commentary will follow with analysis of the 2009 report in government’s accounting for standard business, the bailouts and the unfunded social insurance liabilities.