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Summary

Imagine for a moment that the United States government is a public corporation. Imagine that its management structure, fiscal performance, and budget are all up for review. Now imagine that you’re a shareholder in USA Inc. How do you feel about your investment?

Because 45% of us own shares in publicly traded companies, nearly half the country expects quarterly updates on our investments. But although 100% of us are stakeholders in the United States, very few of us look closely at Washington’s financials. If we were long-term investors, how would we evaluate the federal government’s business model, strategic plans, and operating efficiency? How would we react to its earnings reports? Nearly two-thirds of all American households pay federal income taxes, but very few of us take the time to dig into the numbers of the entity that, on average, collects 13% of our annual gross income (not counting another 15-30% for payroll and various state and local taxes).

We believe it’s especially important to pay closer attention to one of our most important investments.

As American citizens and taxpayers, we care about the future of our country. As investors, we’re in an on-going search for data and insights that will help us make more informed investment decisions. It’s easier to predict the future if one has a keen understanding of the past, but we found ourselves struggling to find good information about America’s financials. So we decided to assemble – in one place and in a user-friendly format – some of the best data about the world’s biggest “business.” We also provide some historical context for how USA Inc.’s financial model has evolved over decades. And, as investors, we look at trend lines which help us understand the patterns (and often future directions) of key financial drivers like revenue and expenses.

The complexity of USA Inc.’s challenges is well known, and our presentation is just a starting point; it’s far from perfect or complete. But we are convinced that citizens – and investors – should understand the business of their government. Thomas Jefferson and Alexis de Tocqueville knew that – armed with the right information – the enlightened citizenry of America would make the right decisions. It is our humble hope that a transparent financial framework can help inform future debates.

In the conviction that every citizen should understand the finances of USA Inc. and the plans of its “management team,” we examine USA Inc.’s income statement and balance sheet and present them in a basic, easy-to-use format. We summarize our thoughts in PowerPoint form and in this brief text summary at www.kpcb.com/usainc. We encourage people to take our data and thoughts and study them, critique them, augment them, share them, and make them better. There’s a lot of material – think of it as a book that happens to be a slide presentation.

KPCB
www.kpcb.com
USA Inc. vii
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