FOR IMMEDIATE RELEASE

January 18, 2013

Statement from the Hon. David M. Walker, Founder and CEO of the Comeback America Initiative and former U.S. Comptroller General, on the Consolidated Financial Report for the U.S. Government

The Consolidated Financial Report for the U.S. Government for the fiscal year ended September 30, 2012 was released late yesterday afternoon. Each year the Secretary of the Treasury is required to submit financial statements for the U.S. Government to the President and the Congress, and these statements are audited by the U.S. Government Accountability Office (GAO).

This year’s annual report was issued a month late of its target date and without any fanfare. Very few people will read this important annual report but it is important that the American people understand the key points in it.

Once again the GAO was unable to express an opinion on the federal government’s financial statements and emphasized that the federal government’s fiscal outlook is unsustainable. In addition, the government did not include the financial results of Fannie Mae and Freddie Mac in its consolidated results even though it has provided significant and extended assistance to ensure the viability of these Government Sponsored Entities. The financial reports would have been significantly worse if this consolidation had occurred.

The government uses the cash rather than accrual basis of accounting for budgeting purposes. This method can serve to substantially understate annual deficits. In contrast, the federal government’s annual financial statements use the accrual basis of accounting, which presents a fuller and fairer view of the federal government’s financial condition and future outlook.

According to the report for fiscal 2012, the cash basis unified deficit was $1.09 trillion, while the accrual basis deficit was $1.32 trillion. Furthermore, the way the federal government reports its liabilities obscures its true financial position by excluding debt owed to the Social Security and Medicare Trust Funds and the related unfunded obligations for these important social insurance programs.

When the above amounts and various other commitments and contingencies are included, the federal government’s total financial hole was about $69.8 trillion as of September 30, 2012, up from $65.5 trillion a year earlier. The current estimate of the federal financial hole is about $70.7 trillion and it is growing by an estimated $8.2 million a minute and about $350 billion a month.

It is important that the President and the Congress work together to achieve a fiscal Grand Bargain in 2013. Failure to do so could have serious adverse consequences for our country’s and families’ futures.