1 EXECUTIVE SUMMARY TO THE 2019 FINANCIAL REPORT OF THE U.S. GOVERNMENT
 EXECUTIVE SUMMARY TO THE 2019 FINANCIAL REPORT OF THE U.S. GOVERNMENT 2

Executive Summary to the Fiscal Year 2019 

Financial Report of the United States Government

The Fiscal Year 2019 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 Treasury in 

coordination with OMB, which is part 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 

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

OMB, and the Comptroller General of the U.S. at the GAO 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 and for the fiscal years 

ended September 30, 2019 and 2018. Note 27— Subsequent Events discusses events that occurred after the end of 

the fiscal year that may affect the government’s financial position and condition.

Where We Are Now 

Comparing the Budget and the Financial Report 

The Budget and the Financial Report present complementary perspectives on the government’s financial 

position and condition.

• 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 and spending is measured as outlays, or payments made by the federal 

government to the public or entities outside the government. In simple terms, when total receipts are greater

than outlays, then there is a budget surplus; and when total outlays exceed total receipts, then there is a budget 

deficit.

• 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 2015 - 2019. During 

fiscal year 2019:

• A $338.9 billion increase in outlays was 

offset in part by a $133.5 billion increase 

in receipts to increase the budget deficit by 

$205.4 billion to $984.4 billion. 

• Net operating cost increased $286.1 billion 

or 24.7 percent from $1.2 trillion to $1.4 

trillion, due mostly to a $526.8 billion or 

11.6 percent increase in net cost which 

more than offset a $236.7 billion or 7.0 

percent increase in tax and other revenues.

• The $460.7 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 that are included in net operating cost, 

but not the budget deficit.
3 EXECUTIVE SUMMARY TO THE 2019 FINANCIAL REPORT OF THE U.S. GOVERNMENT

Costs and Revenues 

The government’s “bottom line” net operating cost increased $286.1 billion (24.7 percent) during fiscal year 2019

to $1.4 trillion. It is calculated as follows:

• Starting with total gross costs of $5.3 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 

$5.1 trillion (see Chart 2), an increase of $526.8 billion 

(11.6 percent) from fiscal year 2018. This net increase is 

the combined effect of many offsetting increases and 

decreases across the government. For example:

o Entities administering federal employee and

veterans benefits programs, including the OPM, 

VA, and DOD employ a complex series of assumptions to make actuarial projections of their long-term 

benefits liabilities. These assumptions include but are not limited to interest rates, beneficiary eligibility, 

life expectancy, and medical cost levels. Changes in these assumptions can result in either losses (net cost 

increases) or gains (net cost decreases). Across the government, these net losses from changes in 

assumptions amounted to $198.9 billion in fiscal year 2019, a loss (and net cost) increase of $73.7 billion 

compared to fiscal year 2018.

o DOD net costs increased $210.0 billion due primarily to a $122.2 billion loss increase from changes in 

assumptions referenced above, as well as increases in net costs across DOD’s major programs, including 

military operations, readiness, support, procurement, personnel, and R&D. HHS and SSA net costs 

increased $79.8 billion and $62.6 billion, respectively. These increases resulted largely from increases in 

benefit expenses from the social insurance programs administered by these entities (e.g., Medicare and Social 

Security).

o VA net costs increased $70.7 billion due largely to actuarial losses from experience.

o DOE net cost decreased by $87.3 billion, predominantly due to comparatively lower increases in 

environmental liability estimates.

o Interest costs related to federal debt securities held by the public increased by $46.3 billion due largely to an 

increase in the debt. Interest costs increased by 13.0 percent during fiscal year 2019 and by 60.9 percent over 

the past five fiscal years.

• The government deducts tax and other revenues from net cost (with some adjustments) to derive its fiscal year 

2019 “bottom line” net operating cost of $1.4 trillion.

o From Chart 3, total government tax and other 

revenues grew by $236.7 billion (7.0 percent) to 

about $3.6 trillion for fiscal year 2019.

o Together, individual income tax and tax 

withholdings, and corporate taxes accounted for 

about 89.2 percent of total tax and other revenues in 

fiscal year 2019. Other revenues include Federal 

Reserve earnings, excise taxes, and customs duties.
 EXECUTIVE SUMMARY TO THE 2019 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, 2019:

• Total assets ($4.0 trillion) consist mostly 

of $1.4 trillion in net loans receivable 

(primarily student loans) and $1.1 trillion 

in net PPE.

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.

• Total liabilities ($26.9 trillion) consist 

mostly of: (1) $16.9 trillion in federal debt 

securities held by the public and accrued 

interest and (2) $8.4 trillion in federal 

employee and veteran benefits payable.

o The “public” consists of individuals, corporations, state and local governments, FRB, foreign 

governments, and other entities outside the federal government.

• The government also reports about $6.0 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.

• Federal debt securities 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 fiscal year 2019, debt subject to the statutory limit was $22.7 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 Effective March 2, 2019, the statutory debt limit was set at $22.0 trillion. On August 2, 2019, the BBA of 

2019 (P. L. 116-37) was enacted suspending the statutory debt limit through July 31, 2021.

Key Economic Trends

An examination of key macroeconomic indicators is essential to the discussion of the government’s financial 

performance. During fiscal year 2019, the U.S. economy grew at a more moderate pace and payroll job creation 

slowed modestly, while the unemployment rate declined to a 49-year low. These and other economic and 

financial developments are discussed in greater detail in the Financial Report.
5 EXECUTIVE SUMMARY TO THE 2019 FINANCIAL REPORT OF THE U.S. GOVERNMENT

An Unsustainable Fiscal Path 

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 

defined as one where the ratio of debt held by the public to 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.

The current fiscal path is unsustainable. 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. Nevertheless, the projections demonstrate that policy changes need to be enacted 

for the actual financial outcomes to differ from 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 primary deficit is the difference 

between non-interest spending and 

receipts. The ratio of the primary 

deficit to GDP is useful for gauging 

long-term fiscal sustainability.

• The primary deficit-to-GDP ratio 

spiked during 2009 through 2012 due 

to the financial crisis of 2008-09 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 2.1 percent from 2013 

through 2019. The ratio is projected 

to rise to 2.9 percent in 2020 and then shrink slightly through 2024 as the economy grows. After 2024, 

however, 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 

that peak in 2040, when the primary deficit-to-GDP ratio reaches 3.9 percent. After 2040, the ratio gradually 

decreases as the aging of the population continues at a slower pace, and reaches 2.5 percent in 2094, the last 

year of the projection period.

• These projections assume the individual income and estate and gift tax provisions of the TCJA are 

permanently extended and discretionary spending grows at essentially the same rate as nominal GDP beyond 

2022. Congressional action is required to extend the provisions of the TCJA. GDP, interest, and other 

economic and demographic assumptions are the same as those that underlie the most recent Social Security 

and Medicare Trustees’ Report projections, adjusted for historical revisions that occur annually.

1 Current 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 2019 Trustees’ Report for Medicare (pp 4-5) and Social Security (pp 4-23) and the 2017 Medicaid Actuarial Report.
 EXECUTIVE SUMMARY TO THE 2019 FINANCIAL REPORT OF THE U.S. GOVERNMENT 6

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

the projected effects of the PPACA3 on long-term deficits.

o Enactment of the PPACA in 2010 and the MACRA in 2015 established cost controls for Medicare 

hospital and physician payments whose long-term effectiveness is still to be demonstrated fully.

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

PPACA’s provisions intended to 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.

• The debt-to-GDP ratio was 79 percent 

at the end of fiscal year 2019, and 

under current policy is projected to 

exceed 100 percent by 2030 and

reach 474 percent in 2094.

• The debt-to-GDP ratio rises 

continuously 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 indicates that current fiscal 

policy is unsustainable.

• These debt-to-GDP projections are 

lower than the 2018 Financial Report 

projections and higher than the 2017 

Financial Report projections.

3 The PPACA refers to P.L. 111-148, as amended by P.L. 111-152. The PPACA expands health insurance coverage, provides health insurance subsidies for 

low-income 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 PPACA. (See Note 22 and the Required Supplementary Information section of the 

Financial Report, and the 2019 Medicare Trustees’ Report for more information).
7 EXECUTIVE SUMMARY TO THE 2019 FINANCIAL REPORT OF THE U.S. GOVERNMENT

The Fiscal Gap and the Cost of Delaying Fiscal Policy Reform

• 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 2019 is 3.8 percent of GDP (compared to 

4.1 percent for 2018). 

• 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 3.8 percent of GDP on average over the 

next 75 years. The fiscal gap represents 20.3 percent of 75-year present value receipts and 17.4 percent of 75-

year present value non-interest spending.

• 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 18 percent from 3.8 percent of GDP 

on average over 75 years to 4.5 percent on average over 65 years; if action is delayed by 20 years, the 

magnitude of reforms necessary increases by an additional 24 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

• Projections in the Financial Report indicate that the government’s debt-to-GDP ratio is projected to rise over 

the 75-year projection period and beyond if current policy is kept in place. The projections in this Financial 

Report show that current policy is not sustainable.

• If changes in fiscal policy are not so abrupt as to slow economic growth and those policy changes are adopted

earlier, then the required changes to revenue and/or spending will be smaller to return the government to a 

sustainable fiscal path.

Find Out More

The 2019 Financial Report and other information about the nation’s finances are available at:

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

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

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

The GAO audit report on the U.S. government’s consolidated financial statements can be found beginning on page 

232 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.