1 Executive Summary to the 2017 Financial Report of U.S. Government 

2017 2016*

Gross Costs (4,609.3) $ (4,515.7) $

 Less: Earned Revenue 431.9 $ 383.9 $

 Gain/(Loss) from Changes in Assumptions ( $ (273.3) 356.5) $

Net Cost (4,533.9) $ (4,405.1) $

 Less: Total Tax and Other Revenues 3, $ 3,345.3 374.6 $

 Unmatched Transactions and Balances 2.6 $ 8.1 $

Net Operating Cost (1,156.7) $ (1,051.7) $

Budget Deficit $ (665.7) $ (587.4)

Assets: 3,480.7 $ 3,534.8 $

Less: Liabilities, comprised of:

Debt Held By the Public & Accrued Interest (14,724.1) $ (14,221.1) $

Federal Employee & Veteran Benefits (7,700.1) $ (7,209.4) $

Other (1,472.7) $ (1,401.1) $

Total Liabilities (23, $ (22,831.6) 896.9) $

Net Position (Assets Less Liabilities) (20, $ (19,296.8) 416.2) $

Social Insurance Net Expenditures (49.0) $ (46.7) $

Total Federal Non-Interest Net Expenditures (16.2) $ (10.6) $

Social Insurance Net Expenditures (4.0%) (3.8%)

Total Federal Non-Interest Net Expenditures (1.2%) (0.8%)

Fiscal Gap1 (2.0%) (1.6%)

Sustainability Measures (Dollars in Trillions): 

NATION BY THE NUMBERS

A Snapshot of 

The Government's Financial Position & Condition

Financial Measures (Dollars in Billions): 

Sustainability Measures as Percent of Gross Domestic Product (GDP):

*Restated (See Financial Statement Note 1.V)

1 To prevent the debt-to-GDP ratio from rising over the next 75 years, a combination of noninterest spending reductions and receipts increases that amounts to 2.0 percent of GDP on 

average is needed (1.6 percent of GDP on average in 2016). See Financial Statement Note 23.
 Executive Summary to the 2017 Financial Report of the U.S. Government 2

Executive Summary to the Fiscal Year 2017 

Financial Report of the United States Government

The Fiscal Year 2017 Financial Report of the U.S. Government (Financial Report) presents the U.S. 

Government’s current financial position and condition, and discusses key financial topics and trends. The 

Financial Report is produced by the U.S. Department of the Treasury (Treasury) in coordination with the Office 

of Management and Budget (OMB) of the Executive Office of the President. The table on the preceding page 

presents several key indicators of the Government’s financial position and condition, which are discussed in this 

Summary and, in greater detail, in the Financial Report. The Secretary of the Treasury, Director of OMB, and the 

Comptroller General of the United States at the Government Accountability Office believe that the information 

discussed in this Financial Report is important to all Americans.

This Financial Report addresses the Government’s financial activity and results as of September 30, 2017. 

Note 25, Subsequent Events discusses events that occurred after the end of the fiscal year which may affect the 

Government’s financial position and condition.

Where We Are Now 

Comparing the Budget and the Financial Report

The Budget of the United States Government (Budget) and the Financial Report of the U.S. Government 

present complementary perspectives on the Government’s financial position and condition.

x The Budget is the Government’s primary financial planning and control tool. It accounts for past Government 

receipts and spending, and includes the President’s proposed receipts and spending plan. Receipts are cash 

received by the U.S. Government (Government) and spending is measured as outlays, or payments made by 

the Government to the public. Receipts greater than outlays creates a budget surplus; and outlays greater than 

receipts creates a budget deficit.

x The Financial Report includes the Government’s costs and revenues, assets and liabilities, and other 

important financial information. It compares the Government’s revenues (amounts earned, but not necessarily 

collected), with costs (amounts incurred, but not necessarily paid) to derive net operating cost.

Chart 1 compares the Government’s budget deficit (receipts vs. outlays) and net operating cost (revenues vs. 

costs) for Fiscal Years (FY) 2013 - 2017.

During FY 2017:

x A $126.5 billion increase in outlays was 

offset in part by a $48.2 billion increase in 

receipts to increase the budget deficit by 

$78.3 billion (about 13.3 percent) to 

$665.7 billion. 

x Net operating cost increased by $105.0 

billion or 10.0 percent to $1.2 trillion, due 

largely to a $128.8 billion (2.9 percent) 

increase in net cost, offset by a slight $29.3 

billion (0.9 percent) increase in tax and 

other revenues.

x The $491.0 billion difference between the 

budget deficit and net operating cost is 

primarily due to accrued costs (incurred 

but not necessarily paid) related to increases in estimated federal employee and veteran benefits liabilities and 

certain other liabilities that are included in net operating cost, but not the budget deficit.
3 Executive Summary to the 2017 Financial Report of U.S. Government 

Costs and Revenues 

The Government’s “bottom line” net operating cost increased $105.0 billion (10.0 percent) during FY 2017

to $1.2 trillion. It is calculated as follows:

x Starting with total gross costs of $4.6 trillion, 

the government subtracts earned program 

revenues (e.g., Medicare premiums, national 

park entry fees, and postal service fees) and 

adjusts the balance for gains or losses from 

changes in actuarial assumptions used to 

estimate future federal employee and 

veterans benefits payments to derive its net 

cost before taxes and other revenues of $4.5 

trillion (see Chart 2), an increase of $128.8 

billion (2.9 percent) from FY 2016. This net 

increase is the combined effect of many 

offsetting increases and decreases across the 

Government. For example:

o Agencies administering federal employee 

and veterans benefits programs, including the Office of Personnel Management (OPM), Department of 

Veterans Affairs (VA), and Department of Defense (DOD) employ a complex series of assumptions, 

including but not limited to interest rates, beneficiary eligibility, life expectancy, and medical cost levels,

to make actuarial projections of their long-term benefits liabilities. Changes in these assumptions can 

result in either losses (net cost increases) or gains (net cost decreases). Across the Government, these net 

actuarial losses amounted to $356.5 billion in FY 2017, an increase of $83.2 billion over FY 2016.

o Agencies that extend credit to the public, including student and housing loans, estimate and re-estimate 

long-term program cost employing multiple loan performance and economic assumptions. For example, 

these estimates and re-estimates contributed to a $19.4 billion net cost decrease at the Department of 

Education and a $39.7 billion net cost increase at the Department of Housing and Urban Development.

o Department of Health and Human Services (HHS) and Social Security Administration (SSA) net costs 

increased $11.8 billion and $17.0 billion, respectively, largely due to increases in benefit expenses from 

the social insurance programs administered by those agencies (e.g., Medicare, Social Security). DOD net 

costs increased by $56.2 billion due largely to the aforementioned changes in assumptions. Interest costs 

on the debt held by the public increased $23.3 billion due largely to an increase in the debt. 

o Department of Energy (DOE) net costs decreased $23.0 billion predominantly due to changes in 

estimated environmental remediation costs compared to FY 2016 and Department of Homeland Security 

(DHS) net costs increased $10.9 billion primarily for hurricane response and recovery.

x The Government deducts tax and other revenues from net cost (with some adjustments) to derive its FY 2017 

“bottom line” net operating cost of $1.2 trillion.

o From Chart 3, total Government tax and other 

revenues grew by $29.3 billion (0.9 percent) to 

about $3.4 trillion for FY 2017.

o Together, individual income tax and tax 

withholdings, and corporation taxes accounted 

for about 88.5 percent of total tax and other 

revenues in FY 2017. Other revenues include 

Federal Reserve earnings, excise taxes, and 

customs duties.
 Executive Summary to the 2017 Financial Report of the U.S. Government 4

Assets and Liabilities

Chart 4 summarizes the assets and liabilities that the Government reports on its balance sheet. As of 

September 30, 2017:

x Total assets ($3.5 trillion) consist mostly 

of $1.3 trillion in net loans receivable 

(primarily student loans) and $1.0 trillion 

in net property, plant, and equipment).

o Other significant Government 

resources not reported on the 

balance sheet include stewardship 

assets, natural resources, and the 

Government’s power to tax and 

set monetary policy.

x Total liabilities ($23.9 trillion) consist 

mostly of: (1) $14.7 trillion in federal debt 

securities held by the public and accrued 

interest and (2) $7.7 trillion in federal 

employee and veteran benefits payable.

o The “public” consists of individuals, corporations, state and local governments, Federal Reserve 

Banks, foreign governments, and other entities outside the federal government.

x The Government also reports about $5.6 trillion of intragovernmental debt outstanding, which arises when 

one part of the Government borrows from another.

o For example, Government funds (e.g., Social Security and Medicare trust funds) typically must invest 

excess annual receipts, including interest earnings, in Treasury-issued federal debt securities. 

Although not reflected in Chart 4, these securities are included in the calculation of federal debt

subject to the debt limit.

x Debt held by the public plus intragovernmental debt equals gross federal debt, which, with some adjustments, 

is subject to a statutory debt ceiling (“debt limit”).

o At the end of FY 2017, debt subject to the statutory limit (DSL) was $20.2 trillion. Increasing or 

suspending the debt limit does not increase spending or authorize new spending; rather, it permits the 

Government to continue to honor pre-existing commitments.

o Legislation most recently suspended the debt limit from November 2, 2015 through March 15, 2017, 

and from September 8, 2017 through December 8, 2017. See Note 25, Subsequent Events, of the 

Financial Report for developments since the end of the fiscal year.

Considering key macroeconomic indicators can help place the discussion of the Government’s financial 

results in a broader context. During FY 2017, the economy continued to grow, job growth decelerated, and the 

unemployment rate declined. These and other economic and financial developments are discussed in greater detail 

in the Financial Report.
5 Executive Summary to the 2017 Financial Report of U.S. Government 

Where We Are Headed 

An important purpose of this Financial Report is to help citizens understand current fiscal policy and the 

importance and magnitude of policy reforms necessary to make it sustainable. A sustainable fiscal policy is one 

where the ratio of debt held by the public to Gross Domestic Product (GDP) (the debt-to-GDP ratio) is stable or 

declining over the long term. GDP measures the size of the Nation’s economy in terms of the total value of all 

final goods and services that are produced in a year. Considering financial results relative to GDP is a useful 

indicator of the economy’s capacity to sustain the Government’s many programs.

To determine if current fiscal policy is sustainable, the projections discussed in the Financial Report assume 

current policy will continue indefinitely.1 The projections are therefore neither forecasts nor predictions. As 

policy changes are enacted, actual financial outcomes will be different than those projected.

Receipts, Spending, and the Debt 

Chart 5 shows historical and current policy projections for receipts, non-interest spending by major category, 

net interest, and total spending expressed 

as a percent of GDP. The projections do 

not reflect the Tax Cuts and Jobs Act (P.L. 

115-97) enacted on December 22, 2017; 

for more information on the Act, see Note 

25, Subsequent Events.

x The primary deficit is the difference 

between non-interest spending and 

receipts. The primary deficit 

expressed as a ratio relative to GDP 

(the primary deficit-to-GDP ratio) is 

useful for gauging long-term fiscal 

sustainability.

x The primary deficit-to-GDP ratio 

spiked during 2009 through 2012 due 

to the financial crisis and the ensuing 

severe recession, as well as increased 

spending and temporary tax 

reductions enacted to stimulate the economy and support recovery. As an economic recovery took hold, the 

primary deficit-to-GDP ratio fell, averaging 1.9 percent from 2013-2017. The ratio is projected to shrink 

further through 2021 as discretionary spending limits remain in effect and economic recovery boosts tax 

receipts.

x After 2021, increased spending for Social Security and health programs2 due to the continued retirement of 

the baby boom generation and increases in health care costs is projected to result in increasing primary 

deficits through 2038 when the primary deficit-to-GDP ratio reaches 2.1 percent. After 2038, the ratio slowly 

declines as the aging of the population slows, and reaches 0.6 percent in 2091.

1Current policy in the projections is based on current law, but includes extension of certain policies that expire under current law but are routinely extended 

or otherwise expected to continue.

2 See the 2017 Trustees Report for Medicare (pp 4-5) and Social Security (pp 4-23).
 Executive Summary to the 2017 Financial Report of the U.S. Government 6

x The persistent long-term gap between projected receipts and total spending shown in Chart 5 occurs despite 

the projected effects of the Affordable Care Act (ACA)3 on long-term deficits.

o Enactment of the ACA in 2010 and the Medicare Access and CHIP Reauthorization Act (MACRA) in 

2015 established cost controls for Medicare hospital and physician payments whose long-term 

effectiveness is still to be demonstrated.

o There is uncertainty about the extent to which these projections can be achieved and whether the 

ACA’s provisions that reduce Medicare cost growth will be overridden by new legislation. 

Table 1 summarizes the status and projected trends of the Government’s Social Security and Medicare 

Trust Funds.

The primary deficit projections in Chart 5, along with those for interest rates and GDP, determine the debtto-GDP ratio projections in Chart 6.

x The debt-to-GDP ratio was 76 percent 

at the end of FY 2017, and under 

current policy is projected to be 74 

percent in 2027, 136 percent in 2047, 

and 297 percent in 2092.

x The debt-to-GDP ratio rises 

continuously despite flat primary 

deficits mainly because higher levels 

of debt lead to higher net interest 

expenditures, which lead to higher 

deficits and debt. The continuous rise 

of the debt-to-GDP ratio after 2026 

indicates that current fiscal policy is 

unsustainable.

x These debt-to-GDP projections are 

generally higher than the 

corresponding projections in both the FY 2016 and FY 2015 Financial Reports.

3 The ACA refers to P.L. 111-148, as amended by P.L. 111-152. The ACA expands health insurance coverage, provides health insurance subsidies for lowincome individuals and families, includes many measures designed to reduce health care cost growth, and significantly reduces Medicare payment rates 

relative to the rates that would have occurred in the absence of the ACA. (See Note 22 and the Required Supplementary Information section of the Financial 

Report, and the 2017 Medicare Trustees Report for more information).
7 Executive Summary to the 2017 Financial Report of U.S. Government 

The Fiscal Gap and the Cost of Delaying Fiscal Policy Reform

x The 75-year fiscal gap is a measure of how much primary deficits must be reduced over the next 75 years in 

order to make fiscal policy sustainable. That estimated fiscal gap for 2017 is 2.0 percent of GDP (compared to 

1.6 percent for 2016). 

x This estimate implies that making fiscal policy sustainable over the next 75 years would require some 

combination of spending reductions and receipt increases that equals 2.0 percent of GDP on average over the 

next 75 years. The fiscal gap represents 10.0 percent of 75-year present value receipts and 9.4 percent of 75-

year present value non-interest spending.

x The timing of policy changes to make fiscal policy sustainable has important implications for the well-being 

of future generations as is shown in Table 2.

o Table 2 shows that, if action is delayed by 10 years, the estimated magnitude of primary surplus 

increases necessary to close the 75-year fiscal gap increases by about 20 percent from 2.0 percent of 

GDP on average over 75 years to 2.4 percent on average over 65 years); if action is delayed by 20 

years, the magnitude of reforms necessary increases by about 50 percent. 

o Future generations are harmed by a policy delay because the higher the primary surpluses are during 

their lifetimes, the greater is the difference between the taxes they pay and the programmatic 

spending from which they benefit.

Conclusion

x Projections in the Financial Report indicate that the Government’s debt-to-GDP ratio is projected to remain 

relatively stable over the next decade, and then continuously rise over the remaining projection period and 

beyond if current policy is kept in place. This trend implies that current policy is not sustainable.

x As long as changes in policy are not so abrupt as to slow economic growth, the sooner policy changes are 

adopted, the smaller the changes to revenue and/or spending will need to be to return the Government to a 

sustainable fiscal path.

Find Out More

The 2017 Financial Report of the United States Government and other information about the nation’s 

finances are available at:

x U.S. Department of the Treasury, http://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/fr_index.htm;

x OMB’s Office of Federal Financial Management, https://www.whitehouse.gov/omb/management/office-federalfinancial-management/ ; and

x GAO, http://www.gao.gov/financial.html

The Government Accountability Office’s (GAO) audit report on the U.S. Government’s consolidated financial 

statements can be found beginning on page 218 of the full Financial Report. GAO was unable to express an

opinion (disclaimed) on these consolidated financial statements for the reasons discussed in the audit report.