The Citizen's Guide to the Fiscal Year (FY) 2011 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. This Guide and the full Report are produced by the U.S. Department of the Treasury in cooperation with the Office of Management and Budget (OMB).
During FY 2011, nearly equivalent increases in Federal tax receipts and outlays resulted in a cash-based U.S. budget deficit that remained essentially flat at $1.3 trillion. The Government's net cost decreased from $4.3 trillion to $3.7 trillion due in large part to decreased estimated costs for federal employee and veteran benefits as well as a decline in projected costs for the Government's economic recovery programs and a slight revenue increase from $2.2 trillion to $2.4 trillion. The net cost of $3.7 trillion and revenue of $2.4 trillion yield a "bottom line" net operating cost figure for the Federal Government of $1.3 trillion, a $768 billion or 37 percent decrease from $2.1 trillion in FY 2010 (see Chart 1). See 'Where We Are Now', p. iv .
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 increase in recent years, but should decline as the economy recovers.
During FY 2011, the economy continued to grow, albeit at a slower pace than in the previous year, residential homebuilding increased for the first time since FY 2005, and the economy added about 1.9 million non-farm payroll jobs. 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), represented unprecedented efforts to stabilize the financial markets, jump-start the Nation's economy, and create or save millions of jobs. The Government and the taxpayer continue to see returns on many of these investments as evidenced by repayments made under the Troubled Assets Relief Program (TARP) and the selling of many Government investments during FY 2011. See 'Review of the Government's Stabilization Efforts', p. viii.
While the Government's immediate priority is to continue to promote policies that foster economic recovery, there are longer term fiscal challenges that must ultimately be addressed. The aging of the population due to the retirement of the "baby boom" generation, increasing longevity, and persistent growth of health care costs 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. Legislative initiatives, such as the Affordable Care Act (ACA) of 2010 and the Budget Control Act (BCA) of 2011 are expected to help bring the Government's expenditures more in line with its receipts. See 'Where We Are Headed' p. x.
This Guide highlights important information contained in the 2011 Financial Report of the United States Government. The Secretary of the Treasury, Director of the Office of Management and Budget (OMB), and Comptroller General of the United States believe that the information discussed in this Guide is important to all Americans.