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US Government Releases FY 2007 Financial Report

by Mike Godfrey, Tax-News.com, Washington

19 December 2007


The US Treasury Department and the Office of Management and Budget this week released the Fiscal Year 2007 Financial Report of the United States Government.

The report details the US government's short-term and long-term financial outlook, including the government's biggest fiscal challenge- the unsustainable growth in entitlement programs. The report complements the President's Budget, which will be released in February 2008.

"The $2.6 trillion in record-breaking revenues that flowed into the Treasury this year reflect a healthy economy. The 39 percent drop in our net operating costs complements the deficit reduction reported in October," explained Treasury Secretary Henry M. Paulson, Jr, continuing:

"But to continue this progress, we must maintain discipline on spending. The expected revenue in years ahead will not come close to meeting the growing cost of our social insurance programs. We all have a responsibility to fix this problem now, before it becomes a severe economic burden for our children and grandchildren."

"This year's budget results reinforce that tax relief combined with spending restraint works. This formula has helped promote economic expansion that, in turn, has helped generate higher-than-expected revenue and resulted in deficit reduction of $250 billion over the last three years," added OMB Director Jim Nussle.

"Reducing the deficit in the short-term will put us in a better position for dealing with the longer-term entitlement issue, which can only be characterized as an oncoming fiscal train wreck."

Revenue results in this year's fiscal report were $2.6 trillion, a 7.6% improvement from last year. Consistent with the improved budget results, the Financial Report's 2007 net operating cost of $276 billion is approximately $175 billion lower than the 2006 figure.

The report indicates that funding for Social Security and Medicare will come up $45 trillion short in the next 75 years. Without reform, the cost of these programs will total 18% of GDP by 2080.

The Government Accountability Office audited the Statement of Social Insurance for the first time and issued a clean opinion this year. The SOSI, a critical component of the Financial Report, compares the government's expected resources for programs such as Social Security and Medicare to what it expects to have to pay in benefits over the next 75 years in current dollar terms. A clean opinion indicates that the report fairly and accurately reflects the financial position of the social insurance programs.


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