Kleiner Perkins partner Mary Meeker analyzes America as a corporation in an epic presentation: USA Inc.: A Basic Summary of America's Financial Statements .
Meeker says USA Inc. is on a parallel course to GM before its bankruptcy.
Only through drastic cost-cutting can our country bounce back.
This report looks at the federal government as if it were a business, with the goal of informing the debate about our nation’s financial situation and outlook. In it, she examine USA Inc.’s income statement and balance sheet. Her aim to interpret the underlying data and facts and illustrate patterns and trends in easy-to-understand ways. She then analyzes the drivers of federal revenue and the history of expense growth, and examines the basic scenarios for how America might move toward positive cash flow.
USA Inc. has many fundamental strengths. On an operating basis (excluding Medicare and Medicaid spending and one-time charges), the federal government’s profit & loss statement is solid, with a 4% median net margin over the last 15 years. But cash flow is deep in the red (by almost $1.3 trillion last year, or -$11,000 per household), and USA Inc.’s net worth is negative and deteriorating. That net worth figure includes the present value of unfunded entitlement liabilities but not hard-to-value assets such as natural resources, the power to tax or mint currency, or what Treasury calls “heritage” or “stewardship assets” like national parks. Nevertheless, the trends are clear, and critical warning signs are evident in nearly every data point she examines.
Here are some key slides from her definitive report:
Spending as a percent of GDP rose 3 percent each year from 1790 and 1930. Worse: It rose 24% in 2010!!!!!!!!
Here's a great breakdown of America's biggest costs.
Debt levels will be three times current levels by 2030. Entitlements and interest alone will exceed total revenue by 2025.
Only 1 in 50 Americans needed Medicaid when it was first created in 1965, 1 in 6 Americans receives Medicaid now.
Extended unemployment benefits could set back America Inc. $34 billion in the next two years alone.
The only good investments: technology, education and infrastructure.
The crucial reforms: entitlement and tax policies
There is no quick-fix to America's deficit problem. While raising taxes could help, the only real solution is cutting costs.
Why we should cut Medicare benefits by 53%
Why we should increase the retirement age to 73 or cut Social Security benefits by 12%.
Read more: http://www.businessinsider.com/mary-meeker-usa-inc-february-24-2011-2#-5
