The Citizen’s Guide to the Fiscal Year (FY) 2010 Financial Report of the U.S. Government presents the Nation’s financial position and condition of the U.S. Government and discusses key financial topics, including continuing economic recovery efforts and fiscal sustainability.
Despite the severe economic downturn and recession that began at the end of 2007, the instability of the financial markets in 2008, and the necessary measures taken to help the economy recover in 2008 and 2009, the economy began to grow again in FY 2010. After falling by 2.7 percent during FY 2009, real Gross Domestic Product (GDP)1 rose at an average annual rate of 3.2 percent over the four quarters of FY 2010; the economy added 691,000 private nonfarm payroll jobs during FY 2010, after losing 6.3 million private jobs from private nonfarm payrolls during FY 2009. Increased Federal tax receipts and a decline in outlays resulted in a narrowing of the primarily cash-based U.S. budget deficit from $1.4 trillion to $1.3 trillion in FY 2010 while net operating cost increased significantly from $1.3 trillion to $2.1 trillion due in large part to increased estimated costs for federal employee and veteran benefits. See ‘Where We Are Now’
Some Government programs act as “automatic stabilizers,” helping to support the economy during a downturn by increasing spending and reducing tax collections. This support is “automatic” because increased spending on programs like unemployment benefits, Social Security, and Medicaid and a reduction in tax receipts happen even without any legislative changes in policies. These automatic stabilizers had caused deficits and net operating costs to surge in recent years, but should decline as the economy recovers.
Policies enacted to foster economic recovery, including the Housing and Economic Recovery Act of 2008 (HERA), the Emergency Economic Stabilization Act of 2008 (EESA), and the American Recovery and Reinvestment Act of 2009 (Recovery Act or ARRA ), continue to affect the Government’s financial position. Implementation of these and other initiatives represent unprecedented efforts to stabilize the financial markets, jump-start the Nation's economy, and create or save millions of jobs. Already, the Government and the taxpayer have begun to see returns on some of these investments as evidenced by substantial repayments made under the Troubled Assets Relief Program (TARP). See ‘The Economic Recovery Effort’
While the Government’s immediate priority is to continue to foster economic recovery, there are longer term fiscal challenges that must ultimately be addressed. Persistent growth of health care costs and the aging of the population due to the retirement of the “baby boom” generation and increasing longevity will make it increasingly difficult to fund critical social programs, including notably Medicare, Medicaid, and Social Security. Chart 2 shows this growing gap between receipts and total spending, indicating that, as currently structured, the Government's fiscal path cannot be sustained indefinitely (see Chart 2). See 'Where We Are Headed'
This Guide highlights important information contained in the 2010 Financial Report of the United States Government. The Secretary of the Treasury, Director of the Office of Management and Budget (OMB), and Acting Comptroller General of the United States believe that the information discussed in this Guide is important to all Americans.
1Real GDP measures the value of final goods and services produced in the economy, adjusted for changes in the overall price level (i.e., for inflation). (Back to Content)