No. 496: ALERT
GAAP-Based U.S. Budget Deficit

January 17, 2013

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Actual 2012 Federal Budget Deficit Hit $6.9 Trillion

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U.S. Treasury Publishes 2012 Financial Statement of the United States Government

Based on generally-accepted-accounting principles—or GAAP-based accounting—the 2012 consolidated financial statements of the United States Government showed a $6.9 trillion deficit for fiscal 2012, up from $4.6 trillion in 2011.  The latest detail showed the uncontainable and uncontrollable actual federal budget deficit to be deteriorating rapidly.  The much-delayed GAAP-based statements were published by the U.S. Treasury, today, January 17th.

Those deficit numbers reflect consistent GAAP accounting on current fiscal operations, plus year-to-year deterioration in the net present value (NPV) of unfunded liabilities for programs such as Social Security and Medicare.  Reflecting the time value of money, the NPV represents the amount of cash in-hand needed to cover future obligations.

Based on tentative calculations from numbers in the report, total U.S. government obligations—including the NPV of the unfunded-liabilities of social programs—is around $88 trillion, or nearly six-times annual U.S. GDP.

Even so, significant accounting problems with the statements continue, including “material” issues raised by the auditor, the Government Accountability Office (GAO).  As a result, the GAO does not offer an opinion on the statements.  With fully-proper accounting, the actual 2012 deficit likely topped $7 trillion, with the 2011 deficit topping $5 trillion, as discussed in Special Commentary (No. 485), Section III.

Before consideration of changes in the unfunded liabilities, the GAAP-based deficit for 2012 was $1,316.3 billion, some $226.9 billion worse than the official cash-based 2012 deficit of $1,089.4 billion.  In 2011, the equivalent GAAP number was $1,312.6 billion, but the cash number was only $14.0 billion less at $1,298.6 billion.

PLEASE NOTE:  A Special Commentary will follow soon with a more-detailed analysis of the 246-page document, including the specifics of the ShadowStats estimates.  The government’s 2012 financial statements are available here: http://fms.treas.gov/fr/index.html.

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