Management's Discussion & Analysis

The Government's Financial Position and Condition

This Financial Report presents the government’s financial position at the end of the fiscal year, explains how and why the financial position changed during the year, and discusses the government’s financial condition and how it may change in the future.

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Table 1 on the previous page and the following summarize the federal government's financial position:

• This Financial Report includes discussion and analysis of the effects that the federal government's response to the COVID-19 pandemic continued to have on the government's financial position during FY 2023.
• During FY 2023, the budget deficit increased by $319.7 billion (23.2 percent) to $1.7 trillion. However, net operating cost decreased by $753.8 billion (18.1 percent) to $3.4 trillion.
• Net operating cost decreased due largely to significant decreases in non-cash costs (including decreases in losses stemming from changes in assumptions affecting cost and liability estimates for the government's employee and veteran benefits programs (which do not affect the current year deficit), and reestimates of long-term student loan costs).
• The government's gross costs of $7.7 trillion, less $539.5 billion in revenues earned for goods and services provided to the public (e.g., Medicare premiums, national park entry fees, and postal service fees), plus $760.6 billion in net losses from changes in assumptions (e.g., interest rates, inflation, disability claims rates) yields the government's net cost of $7.9 trillion, a decrease of $1.2 trillion or 13.3 percent compared to FY 2022.
• Total tax and other revenues decreased $460.3 billion to $4.5 trillion. Deducting these revenues from net cost results in a "bottom line" net operating cost of $3.4 trillion for FY 2023, a decrease of $753.8 billion or 18.1 percent compared to FY 2022.
• Comparing total FY 2023 government assets of $5.4 trillion (including $1.7 trillion of loans receivable, net and $1.2 trillion of PP&E) to total liabilities of $42.9 trillion (including $26.3 trillion in federal debt and interest payable,³ and $14.3 trillion of federal employee and veteran benefits payable) yields a negative net position of $37.5 trillion.
• The budget deficit is primarily financed through borrowing from the public. As of September 30, 2023, debt held by the public, excluding accrued interest, was $26.3 trillion. This amount, plus intra-governmental debt ($6.9 trillion) equals gross federal debt, which, with some adjustments, is subject to the statutory debt limit. As of September 30, 2023, the government's total debt subject to the debt limit was $33.1 trillion. Congress and the President increased the debt limit by $480.0 billion in October 2021 and by $2.5 trillion in December 2021. On June 3, 2023, P.L. 118-5 was enacted, suspending the debt limit through January 1, 2025.

This Financial Report also contains information about projected impacts on the government’s future financial condition. Under federal accounting rules, social insurance amounts as reported in both the SLTFP and in the SOSI are not considered liabilities of the government. From Table 1:

• The SLTFP shows that the PV⁴ of total non-interest spending, including Social Security, Medicare, Medicaid, defense, and education, etc., over the next 75 years, under current policy, is projected to exceed the PV of total receipts by $73.2 trillion (total federal non-interest net expenditures from Table 1).
• The SOSI shows that the PV of the government's expenditures for Social Security and Medicare Parts A, B and D, and other social insurance programs over 75 years is projected to exceed social insurance revenues⁵ by about $78.4 trillion, a $2.5 trillion increase over 2022 social insurance projections.
• The Social Insurance and Total Federal Non-Interest Net Expenditures measures in Table 1 differ primarily because total non-interest net expenditures from the SLTFP include the effects of general revenues and non-social insurance spending, neither of which is included in the SOSI.

The government’s current financial position and long-term financial condition can be evaluated both in dollar terms and in relation to the economy. GDP is a measure of the size of the nation’s economy in terms of the total value of all final goods and services that are produced in a year. Considering financial results relative to GDP is a useful indicator of the economy’s capacity to sustain the government’s many programs. For example:

• The budget deficit increased from $1.4 trillion in FY 2022 to $1.7 trillion in FY 2023. The deficit-to-GDP ratio also increased from 5.4 percent in FY 2022 to 6.3 percent in 2023.
• The budget deficit is primarily financed through borrowing from the public. As of September 30, 2023, the $26.3 trillion in debt held by the public, excluding accrued interest, equates to 97 percent of GDP.
• The 2023 SOSI projection of $78.4 trillion net PV excess of expenditures over receipts over 75 years represents about 4.4 percent of the PV of GDP over 75 years. The excess of total projected non-interest spending over receipts of $73.2 trillion from the SLTFP represents 3.8 percent of GDP over 75 years. As discussed in this Financial Report, changes in these projections can, in turn, have a significant impact on projected debt as a percent of GDP.
• To prevent the debt-to-GDP ratio from rising over the next 75 years, a combination of non-interest spending reductions and receipts increases that amounts to 4.5 percent of GDP on average is needed (4.9 percent of GDP on average in the 2022 projections). The fiscal gap in the 2023 projections represents 23.8 percent of 75-year PV receipts and 19.8 percent of 75-year PV non-interest spending.

FY 2023 Financial Statement Audit Results

For FY 2023, GAO issued a disclaimer of audit opinion on the accrual-based, government-wide financial statements, as it has for the past 26 years, due to certain material weaknesses in internal control over financial reporting and other limitations on the scope of its work. In addition, GAO issued a disclaimer of opinion on the sustainability financial statements due to significant uncertainties primarily related to the achievement of projected reductions in Medicare cost growth and certain other limitations. GAO's audit report on page 218 of this Financial Report, discusses GAO's findings.

In FY 2023, 19 of the 24 entities required to issue audited financial statements under the CFO Act received unmodified audit opinions, as did 13 of 16 additional significant consolidation entities (see Table 10 and Appendix A).⁶

The Government-wide Reporting Entity

This Financial Report includes the financial status and activities of the executive, legislative, and judicial branches of the federal government. SFFS No. 47, Reporting Entity, provides criteria for identifying organizations that are consolidation entities, disclosure entities, and related parties. Such criteria are summarized in Note 1.A, Significant Accounting Policies, Reporting Entity, and in Appendix A, which lists the entities included in this Financial Report by these categories. The assets, liabilities, results of operations, and related activity for consolidation entities are consolidated in the financial statements.

Fannie Mae and Freddie Mac meet the criteria for disclosure entities and, consequently, are not consolidated into the government’s financial statements. However, the values of the investments in such entities, changes in value, and related activity with these entities are included in the consolidated financial statements. The FR System and the SPVs are disclosure entities and are not consolidated into the government’s financial statements. See Note 1.A and Note 27—Disclosure Entities and Related Parties for additional information. In addition, per SFFAS No. 31, Accounting for Fiduciary Activities, fiduciary funds are not consolidated in the government financial statements.⁷

Most significant consolidation entities prepare financial statements that include financial and performance related information, as well as Annual Performance Reports. More information may be obtained from entities’ websites indicated in Appendix A and at https://www.performance.gov/.

The following pages contain a more detailed discussion of the government’s financial results for FY 2023, the Budget, the economy, the debt, and a long-term perspective about fiscal sustainability, including the government’s ability to meet its social insurance benefits obligations. The information in this Financial Report, when combined with the Budget, collectively presents information on the government’s financial position and condition.

Accounting Differences Between the Budget and the Financial Report

Each year, the administration issues two reports that detail the government’s financial results: the Budget and this Financial Report. The exhibit on the following page provides the key characteristics and differences between the two documents.

Budget Deficit vs. Net Operating Cost

Three key components of the Budget process are: 1) appropriations; 2) obligations; and 3) outlays. An appropriation is a provision of law authorizing the expenditure of funds for a given purpose. Rescissions and cancellations are reductions in law of budgetary resources. They are considered permanent reductions unless legislation clearly indicates that the reduction is temporary. Once funds are appropriated by Congress, Treasury issues warrants that officially establish the amounts available to be obligated and spent (i.e., expended or outlayed) by each agency. An agency’s obligation of funds is a binding agreement to outlay funds for a particular purpose immediately or in the future. The budget deficit is measured as the excess of outlays, or payments made by the government, over receipts, or cash received by the government.

Net operating cost, calculated on an accrual basis, is the excess of costs (what the government has incurred but has not necessarily paid) over revenues (what the government has collected and expects to collect but has not necessarily received). As shown in Chart 1, net operating cost typically exceeds the budget deficit due largely to the inclusion of cost accruals associated with increases in estimated liabilities for the government’s postemployment benefit programs for its military and civilian employees and veterans as well as environmental liabilities.

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The government’s primarily cash-based⁹ budget deficit increased by $319.7 billion (23.2 percent) from approximately $1.4 trillion in FY 2022 to about $1.7 trillion in FY 2023 due to a $456.8 billion decrease in receipts which more than offset a $137.1 billion decrease in outlays in FY 2023. The decrease in receipts can be attributed to lower individual income tax receipts as capital gains realizations fell and lower deposits of earnings by the Federal Reserve due to higher interest rates. These decreases were partially offset by higher social insurance and retirement receipts due to a strong labor market boosting wages and salaries. The decrease in outlays in part reflects the broad-based student loan debt relief, which increased outlays in FY 2022, and the effect of the reversal of broad-based debt relief in FY 2023 as a result of the Supreme Court 's decision in Biden v. Nebraska. It also reflects decreases due to the expiration of the expanded child tax credit as well as reductions in COVID-19 related spending, including spending by Treasury from the Coronavirus Relief Fund and by the Food and Nutrition Service for SNP and child nutrition programs. Outlays for some other categories of spending increased, including Social Security, Medicare, Medicaid, and net interest.¹⁰

Treasury’s September 2023 MTS provides fiscal year-end receipts, spending, and deficit information for this Financial Report. The MTS presents primarily cash-based spending, or outlays, for the fiscal year in a number of ways, including by month, by entity, and by budget function classification. The Budget is divided into approximately 20 categories, or budget functions, as a means of organizing federal spending by primary purpose (e.g., National Defense, Transportation, and Health). Multiple entities may contribute to one or more budget functions, and a single budget function may be associated with only one entity. For example, DOD, DHS, DOE, and multiple other entities administer programs that are critical to the broader functional classification of National Defense. DOD, OPM, and many other entities also administer Income Security programs (e.g., retirement benefits, housing, financial assistance). By comparison, the Medicare program is a budget function category unto itself and is administered exclusively at the federal level by HHS. Federal spending information by budget function and other categorizations may be found in the September 2023 MTS.¹¹

The government's largely accrual-based net operating cost decreased by $753.8 billion (18.1 percent) to $3.4 trillion during FY 2023. As discussed in this Financial Report, as the deficit is affected by changes in both receipts and outlays, so too are the government's net operating costs affected by changes in both revenues and costs.

The Reconciliation of Net Operating Cost and Budget Deficit statement articulates the relationship between the government’s accrual-based net operating cost and the primarily cash-based budget deficit. The difference between the government’s budget deficit and net operating cost is typically impacted by many variables. For example, from Table 2, 88 percent of the $1.7 trillion net difference for FY 2023 is attributable to a $1.5 trillion net increase in liabilities for federal employee and veteran benefits payable (see Note 13—Federal Employee and Veteran Benefits Payable). Other differences include: 1) a $108.1 billion increase in advances from others and deferred revenue (see Note 17—Advances from Others and Deferred Revenue); 2) a $55.0 billion decrease in net taxes receivable (see Note 3–Accounts Receivable, Net); and 3) a $45.4 billion decrease in advances and prepayments made by the federal government (see Note 9—Advances and Prepayments).

The Government’s Net Position: “Where We Are”

The government’s financial position and condition have traditionally been expressed through the Budget, focusing on surpluses, deficits, and debt. However, this primarily cash-based discussion of the government’s net outlays (deficit) or net receipts (surplus) tells only part of the story. The government’s accrual-based net position, (the difference between its assets and liabilities, adjusted for unmatched transactions and balances), and its “bottom line” net operating cost (the difference between its revenues and costs) are also key financial indicators. The following includes brief discussions of some of the diminishing effects of the pandemic on the government’s financial results for FY 2023. Please refer to Note 29—COVID-19 Activity and other disclosures in this Financial Report, as well as in the individual entities’ financial statements for more information.

Costs and Revenues

The government’s Statement of Operations and Changes in Net Position, much like a corporation’s income statement, shows the government’s “bottom line” and its impact on net position (i.e., assets net of liabilities, adjusted for unmatched transactions and balances). To derive the government’s “bottom line” net operating cost, the Statement of Net Cost first shows how much it costs to operate the federal government, recognizing expenses when incurred, regardless of when payment is made (accrual basis). It shows the derivation of the government’s net cost or the net of: 1) gross costs, or the costs of goods produced and services rendered by the government; 2) the earned revenues generated by those goods and services during the fiscal year; and 3) gains or losses from changes in actuarial assumptions used to estimate certain liabilities. This amount, in turn, is offset against the government’s taxes and other revenue reported in the Statement of Operations and Changes in Net Position to calculate the “bottom line” or net operating cost.

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Table 3 shows that the government’s “bottom line” net operating cost decreased $753.8 billion (18.1 percent) during 2023 from $4.2 trillion to $3.4 trillion. This decrease is due mostly to a $1.2 trillion (13.3 percent) decrease in net costs, which more than offset a $460.3 billion (9.3 percent) decrease in tax and other revenues over the past fiscal year as discussed in the following.

Assets and Liabilities

The government’s net position at the end of the fiscal year is derived by netting the government’s assets against its liabilities, as presented in the Balance Sheet (summarized in Table 4).¹² The Balance Sheet does not include the financial value of the government’s sovereign powers to tax, regulate commerce, or set monetary policy or value of nonoperational resources of the government, such as national and natural resources, for which the government is a steward. In addition, as is the case with the Statement of Operations and Changes in Net Position, the Balance Sheet includes a separate presentation of the portion of net position related to funds from dedicated collections. Moreover, the government’s exposures are broader than the liabilities presented on the Balance Sheet. The government’s future social insurance exposures (e.g., Medicare and Social Security) as well as other fiscal projections, commitments and contingencies, are reported in separate statements and disclosures. This information is discussed later in this MD&A section, the financial statements, and RSI sections of this Financial Report.

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The federal government’s direct loans and loan guarantee programs are used to promote the nation’s welfare by making financing available to segments of the population not served adequately by non-federal institutions, or otherwise providing for certain activities or investments. For those unable to afford credit at the market rate, federal credit programs provide subsidies in the form of direct loans offered at an interest rate lower than the market rate. For those to whom non-federal financial institutions are reluctant to grant credit because of the high risk involved, federal credit programs guarantee the payment of these non-federal loans and absorb the cost of defaults. For example, Education supports individuals engaged in education programs through a variety of student loan, grant and other assistance programs. USDA administers loan programs to support the nation’s farming and agriculture community. HUD loan programs support affordable homeownership, as well as the construction and rehabilitation of housing projects for the elderly and persons with disabilities. SBA loan programs enable the establishment and vitality of small businesses and assist in the economic recovery of communities after disasters. Loans receivable consists primarily of direct loans disbursed by the government, receivables related to guaranteed loans that have defaulted, and certain receivables for guaranteed loans that the government has purchased from lenders. The federal government’s direct loan portfolio increased by $261.0 billion (18.2 percent) to $1.7 trillion during FY 2023, with Education and SBA together accounting for more than three-fourths of the total.

Loan guarantee programs are another form of federal lending. For those to whom non-federal financial institutions are reluctant to grant credit because of the high risk involved, federal credit programs guarantee the payment of these non-federal loans and absorb the cost of defaults. Significant changes to the federal government’s loans receivable, net, and loan guarantee liabilities, as discussed in Note 4, include:

• Education has loan programs that are authorized by Title IV of the Higher Education ct of 1965. The William D. Ford Federal Direct Loan Program (referred to as the Direct Loan Program), was established in FY 1994 and offers four types of educational loans: Stafford, Unsubsidized Stafford, Parent Loan for Undergraduate Students, and consolidation loans. Education’s net loans receivable for its Direct Loan Program increased from $816.6 billion to $1.0 trillion (60.8 percent of total loans receivable, net). This increase was largely due to the reversal of the broad-based student loan debt relief as a result of the Supreme Court’s ruling in Biden v. Nebraska. Education had announced the broad-based relief during FY 2022 to address the financial harms of the pandemic by smoothing the transition back to repayment and helping borrowers at highest risk of delinquencies or default once payments resumed. In addition, all federal wage garnishments and collections actions for borrowers with federally held loans in default were halted.
• Treasury purchased a $50 billion note issued by a trust created by FDIC in its receivership capacity and backed by a guarantee from the FDIC in its corporate capacity.
• SBA makes loans to microloan intermediaries and provides a direct loan program that assists homeowners, renters and businesses recover from disasters. SBA’s Disaster Assistance Loan Program makes direct loans to disaster survivors under four categories: 1) physical disaster loans to repair or replace damaged homes and personal property; 2) physical disaster loans to businesses of any size; 3) EIDLs to eligible small business and nonprofit organizations without credit available elsewhere; and 4) economic injury loans to eligible small businesses affected by essential employees called up to active duty in the military reserves. In FY 2023 SBA’s credit program receivables decreased by $49.6 billion from FY 2022 due largely to write-offs of direct disaster loans.
• Fluctuations in loan programs for HUD, DOT, and DFC.

Federal government general PP&E includes many of the physical resources that are vital to the federal government’s ongoing operations, including buildings, structures, facilities, equipment, internal use software, and general-purpose land. DOD comprises approximately 67.4 percent of the government’s reported general PP&E of $1.2 trillion as of September 30, 2023. See Note 6—General Property, Plant, and Equipment, Net.

“Other” assets of $1.1 trillion in Table 4 and Chart 5 includes: 1) $319.9 billion in accounts receivable, net; 2) $252.7 billion in “Advances and Prepayments”; and 3) $240.4 billion in investments in GSEs. Treasury comprises approximately 57.7 percent of the government’s reported accounts receivable, net, mostly in the form of reported taxes receivable, which consist of unpaid assessments due from taxpayers, unpaid taxes related to IRC section 965, and deferred payments for employer’s share of FICA taxes pursuant to the CARES Act. Taxes receivable, net, decreased by $55.0 billion during FY 2023, primarily due to the reduction in IRC 965(h) and to payments to Treasury of the deferred employer portion of FICA Social Security taxes. (See Note 3—Accounts Receivable, Net). Advances and Prepayments represent funds disbursed in contemplation of the future performance of services, receipt of goods, the incurrence of expenditures, or the receipt of other assets. The $45.4 billion decrease in this amount was largely attributable to a reduction in the estimated amount of eligible costs incurred by state, local, territorial, and tribal governments pursuant COVID-19 legislation (See Note 9—Advances and Prepayments). Investments in GSEs refers to actions taken by Treasury in the wake of the 2008 financial crisis to maintain the solvency of the GSEs (Fannie Mae and Freddie Mac) so they can continue to fulfill their vital roles in the mortgage market while the administration and Congress determine what structural changes should be made to the housing finance system. (See Note 8—Investment in Investment in Government-Sponsored Enterprises).

Liabilities

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The federal debt held by the public measured as a percent of GDP (debt-to-GDP ratio) (Chart 7) compares the country 's debt to the size of its economy, making this measure sensitive to changes in both. Over time, the debt-to-GDP ratio has varied widely:

• For most of the nation’s history, through the first half of the 20th century, the debt-to-GDP ratio has tended to increase during wartime and decline during peacetime.
• Chart 7 shows that wartime spending and borrowing pushed the debt-to-GDP ratio to an all-time high of 106 percent in 1946, soon after the end of World War II, but it decreased rapidly in the post-war years.
• The ratio grew rapidly from the mid-1970s until the early 1990s. Strong economic growth and fundamental fiscal decisions, including measures to reduce the federal deficit and implementation of binding PAYGO rules (which require that new tax or spending laws not add to the deficit), generated a significant decline in the debt-to-GDP ratio, from a peak of 48 percent in FYs 1993-1995, to 31 percent in 2001.
• The debt-to-GDP ratio rose significantly in 2008-2009 during the financial crisis and again in 2020-2021 during the pandemic reflecting the government’s responses to both events and the resulting significant spending and deficit increases, as well as the economic challenges experienced during both periods.
• During the first decade of the 21st century, PAYGO rules were allowed to lapse, significant tax cuts were implemented, entitlements were expanded, and spending related to defense and homeland security increased. By September 2008, the debt-to-GDP ratio was 39 percent of GDP.
• PAYGO rules were reinstated in 2010, but the extraordinary demands of the 2008 economic and financial crisis and the consequent actions taken by the federal government, combined with slower economic growth in the wake of the crisis, pushed the debt-to-GDP ratio up to 74 percent by the end of FY 2014.
• The extraordinary demands of the pandemic, the government's response, and pressures on the economy contributed to a rise in the debt-to-GDP ratio to approximately 100 percent during FY 2020 and FY 2021.
• The debt was approximately 97.0 percent of GDP at the end of FY 2023. This ratio increased during FY 2023 because debt grew faster than GDP,^15,16 From Chart 7, since 1940, the average debt-to-GDP ratio is 50 percent.

See Note 29—COVID-19 Activity, as well as the referenced agencies' FY 2023 financial statements for additional information about the financial effects of the federal government's response to the pandemic. See Note 30—Subsequent Events for information about events that occurred after the end of the fiscal year that may affect the government's financial results.

The Economy in FY 2023

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¹ Source: Bureau of Economic Analysis
² Source: Bureau of Labor Statistics
*Some FY 2022 data may differ from the FY 2022 Financial Report due to updates and revisions.

A consideration of U.S. economic performance provides useful context when evaluating the government’s financial statements. In FY 2023, the economy’s growth accelerated and yet inflation continued to slow. Payroll job creation remained relatively strong even as the rebalancing of labor demand and supply gained momentum. Personal saving rates ended up higher over the year—though they remained below pre-pandemic levels. In addition, supply chains (which were stressed in FY 2022 due to lingering effects of the pandemic and Russia’s invasion of Ukraine) recovered further, lessening inflationary pressures. This significant progress on the inflation front has supported real (inflation-adjusted) income and wage growth.

As summarized in Table 5, the real GDP grew by 2.9 percent over the four quarters of FY 2023. PCE and net exports were the largest contributors to economic growth. Over the four quarters of FY 2023, growth of PCE accelerated to 2.2 percent, after growing 1.9 percent in the previous fiscal year; net exports added 0.2 percentage points to growth in FY 2023, stepping up from an 0.1 percentage point contribution in FY 2022. In addition, total government consumption and investment increased in FY 2023. In the previous fiscal year, government spending had declined 0.6 percent as pandemic-related financial support programs unwound, but public expenditures rose 4.8 percent in FY 2023—partly reflecting higher real spending by state and local governments as well as higher federal defense expenditures. Meanwhile, business fixed investment and inventories made positive, though smaller contributions. Business fixed investment expanded by 4.1 percent, slowing from a gain of 5.8 percent over the previous four quarters. Inventory investment contributed 0.2 percentage points to growth in FY 2023, or one-half the 0.4 percentage point addition to growth in FY 2022, as firms built up inventories more slowly. In addition, the drag from residential investment slowed somewhat despite rising mortgage rates: residential investment growth dropped 11.4 percent in FY 2022, but the decline tapered to 7.2 percent in the most recent fiscal year. Notably, the final quarter of FY 2023 saw an upturn in residential investment, after nine consecutive quarters of decline.

Labor markets continued to generate a substantial number of jobs but also showed signs of very gradual easing over the course of FY 2023. On average, employers added 255,000 payroll jobs per month in FY 2023, a relatively rapid pace but about one-half the monthly average of 492,000 generated in FY 2022. Twice during FY 2023 the unemployment rate dropped to a 54-year low of 3.4 percent but climbed to 3.8 percent by the end of the fiscal year, pushed higher by improved labor force participation rates, including participation among older workers and women. In addition to increased labor supply, labor demand gradually eased. From September 2022 to September 2023, the number of job openings fell from 10.9 million to 9.4 million—still elevated but only 1.8 million above the pre-pandemic peak. Moreover, the ratio of vacancies to unemployed persons declined by 0.4 units to 1.5 job openings per unemployed person, suggesting some loosening of conditions but still above the 1.2 vacancies per unemployed person averaged in 2018 and 2019.

Inflation slowed markedly during FY 2023, as supply-chain disruptions receded, demand for goods and services became more balanced, and energy and food prices eased. Nonetheless, shelter price inflation remained very high, partly offsetting progress in reducing other components of core inflation (which excludes good and energy). The CPI rose 3.7 percent over the 12 months of FY 2023, less than half the 8.2 percent pace during the previous fiscal year. Core inflation was 4.1 percent over the fiscal year ending September 2023, decelerating from the 6.6 percent pace during FY 2022.

Although gains in nominal income and wages slowed to a more normal pace, lower inflation helped to boost purchasing power in real terms. Real disposable personal income increased 3.8 percent over the 12 months of FY 2023, more than recovering from the 2.3 percent decline during the previous fiscal year. Although the pace of nominal average hourly earnings growth for production and non-supervisory workers slowed in FY 2023 to 4.4 percent, it was still relatively strong. Combined with slower inflation, real average hourly earnings rose 0.8 percent during FY 2023, after declining 2.4 percent in the previous fiscal year.

Footnotes

³ On the government's Balance Sheet, federal debt and interest payable consists of Treasury securities, net of unamortized discounts and premiums, and accrued interest payable. The public consists of individuals, corporations, state and local governments, FRB, foreign governments, and other entities outside the federal government. (Back to Content)

⁴ PVs recognize that a dollar paid or collected in the future is worth less than a dollar today because a dollar today could be invested and earn interest. To calculate a PV, future amounts are thus reduced using an assumed interest rate, and those reduced amounts are summed. (Back to Content)

⁵ Social Security is funded by the payroll taxes and revenue from taxation of benefits. Medicare Part A is funded by the payroll taxes, revenue from taxation of benefits, and premiums that support those programs. Medicare Parts B and D are primarily financed by transfers from the General Fund, which are presented, and by accounting convention, eliminated in the SOSI. For the FYs 2023 and 2022 SOSI, the amounts eliminated totaled $48.5 trillion and $47.5 trillion, respectively. In addition, the SOSI programs include DOL 's Black Lung Program, the projection period for which is 40 years. (Back to Content)

⁶ The 19 entities include the HHS, which received disclaimers of opinions on its 2023, 2022, 2021, 2020, and 2019 SOSI and its 2023 and 2022 SCSIA. The 13 entities include the FDIC, the NCUA, and the FCSIC, which operate on a calendar year basis (December 31 year-end). Statistic reflects 2022 audit results for these organizations if 2023 results are not available. (Back to Content)

⁷ See Note 23—Fiduciary Activities. (Back to Content)

⁸ Under GAAP, most U.S. government revenues are recognized on a 'modified cash' basis, (see Financial Statement Note 1.B). The SOSI presents the PV of the estimated future revenues and expenditures for scheduled benefits over the next 75 years for the Social Security, Medicare, RRP; and 25 years for the Black Lung program. The SLTFP presents the 75-year PV of the projected future receipts and non-interest spending for the federal government. (Back to Content)

⁹ Interest outlays on Treasury debt held by the public are recorded in the Budget when interest accrues, not when the interest payment is made. For federal credit programs, outlays are recorded when loans are disbursed, in an amount representing the PV cost to the government, commonly referred to as credit subsidy cost. Credit subsidy cost excludes administrative costs. (Back to Content)

¹⁰ 10/20/23 press release - Joint Statement of Janet L. Yellen, Secretary of the Treasury, and Shalanda D. Young, Director of the Office of Management and Budget, on Budget Results for Fiscal Year 2023. Note that some amounts in this Financial Report reflect updates subsequent to publication of the press release. (Back to Content)

¹¹ Final MTS for FY 2023 through September 30, 2023 and Other Periods. (Back to Content)

¹² As shown in Table 4, the government’s Balance Sheet includes an adjustment for unmatched transactions and balances, which represent unresolved differences in intra-governmental activity and balances between federal entities. These amounts are described in greater detail in the Other Information section of this Financial Report. (Back to Content)

¹³ For financial reporting purposes, other than multi-use heritage assets, stewardship assets of the government are not recorded as part of PP&E. Stewardship assets are comprised of stewardship land and heritage assets. Stewardship land primarily consists of public domain land (e.g., national parks, wildlife refuges). Heritage assets include national monuments and historical sites that among other characteristics are of historical, natural, cultural, educational, or artistic significance. See Note 26—Stewardship PP&E. (Back to Content)

¹⁴ Beginning in FY 2021 and continuing into FY 2022 and again in FY 2023, Treasury faced two delays in raising the statutory debt limit that required it to depart from its normal debt management procedures and to invoke legal authorities to avoid exceeding the statutory debt limit. During these periods, extraordinary measures taken by Treasury have resulted in federal debt securities not being issued to certain federal government accounts with the securities being restored including lost interest to the affected federal government accounts subsequent to the end of the delay period. During the first delay, Treasury took extraordinary actions from August 2, 2021, through December 15, 2021. On October 14, 2021, P.L. 117-50 was enacted which raised the statutory debt limit by $480.0 billion, from $28,401.5 billion to $28,881.5 billion. Even with this increase, extraordinary measures continued in order for Treasury to manage below the debt limit. On December 16, 2021, P.L. 117-73 was enacted, increasing the debt limit by $2.5 trillion to $31.4 trillion. Due to a second delay in raising the debt limit, Treasury began taking extraordinary actions from January 19, 2023, through June 2, 2023. On June 3, 2023, P.L. 118-5 was enacted, suspending the debt limit through January 1, 2025. See Note 12—Federal Debt and Interest Payable. (Back to Content)

¹⁵ GDP, in this context, refers to nominal GDP. (Back to Content)

¹⁶The increase in debt of $2.0 trillion was greater than the FY 2023 deficit of $1.7 trillion primarily because of the budgetary cost reduction relating to the broad-based student loan debt relief reversal resulting from the Supreme Court 's determination in Biden v. Nebraska. (Back to Content)