GAO Report Shows Deficit Much Larger Than $1.1 TrillionJanuary 30, 2013
On Jan. 17, the Government Accountability Office (GAO) transmitted to Congress its audit of the Fiscal Year 2012 Financial Report of the U.S. Government. To read the Fiscal Year 2012 Financial Report of the U.S. Government, click here.
These financial statements use accounting principles more similar to generally accepted accounting principles used by the private sector. They use accrual rather than cash accounting and reflect changes in assets and liabilities, not just current cash outlays and expenditures.
Honestly accounted for, the actual government deficit in FY 2012 was $6 trillion rather than the $1.1 trillion typically reported. Thus, the true federal deficit is six times what is usually reported and amounts to an annual deficit of nearly 40 percent of the Gross Domestic Product (GDP).
$4.7 trillion of the true deficit reflects the increase in the present value of the unfunded liabilities in Social Security and Medicare (see Table 8 of the report). $1.3 trillion reflects the annual operating revenue and expense deficit (see Table 3 of the report).
The chart below shows the projected increases in debt held by the public.
The chart below shows projected spending, revenues and deficit.
The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget, is required to annually submit audited financial statements for the U.S. government to the President and Congress. GAO is required to audit these statements. The Government Management Reform Act of 1994 has required such reporting since Fiscal Year 1997.
To read the Congressional Budget Office (CBO) monthly budget report for the end of FY 2012, click here.