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Presentation Premise
For America to remain the great country it has been for the past 235 years,
it must determine the best ways to honor the government's fundamental
mission derived from the Constitution:
...to form a more perfect union, establish justice, insure domestic tranquility,
provide for the common defense, promote the general welfare and secure the
blessings of liberty to ourselves and our posterity.
To this end, government should aim to help create a vibrant environment for
economic growth and productive employment. It should manage its operations
and programs as effectively and efficiently as possible, improve its financial
position by driving the federal government's income statement to long-term
break-even, and reduce the unsustainable level of debt on its balance sheet.
KP
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USA Inc. Introduction
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USA Inc. Concept
Healthy financials and compelling growth prospects are key to success for businesses
(and countries). So if the US federal government - which we call USA Inc. - were a
business, how would public shareholders view it? How would long-term investors evaluate
the federal government's business model, strategic plans, and operating efficiency? How
would analysts react to its earnings reports? Although some 45%¹ of American households
own shares in publicly traded companies and receive related quarterly financial statements, not
many "stakeholders" look closely at Washington's financials. Nearly two-thirds of all American
households2 pay federal income taxes, but very few take the time to dig into the numbers of the
entity that, on average, collects 13% of all Americans' annual gross income (not counting
another 15-30% for payroll and various state and local taxes).
We drill down on USA Inc.'s past, present, and (in some cases) future financial dynamics and
focus on the country's income statement and balance sheet and related trends. We isolate and
review key expense and revenue drivers. On the expense side, we examine the major
entitlement programs (Medicare, Medicaid and Social Security) as well as defense and other
major discretionary programs. On the revenue side, we focus on GDP growth (driven by labor
productivity and employment in the long run) and tax policies.
We present basic numbers-driven scenarios for addressing USA Inc.'s financial challenges. In
addition, we lay out the type of basic checklists that corporate turnaround experts might use as
starting points when looking at some of USA Inc.'s business model challenges.
Source: 1) 2008 ICI (Investment Company Institute) / SIFMA (Securities Industry and Financial Markets Association) Equity
and Bond Owners Survey; 2) Number of tax returns with positive tax liability (91MM) divided by total number of returns filed (142MM), per Tax Foundation
KP
calculations based on IRS data; 3) Total federal income taxes (ex. payroll taxes) paid divided by total adjusted gross income, per IRS 2007 data.
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USA Inc. | Introduction
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HOUSE_OVERSIGHT_020845