Financial Metric Definitions for ‘USA Inc.’ Government Accounting Model

Metric Definitions & Qualifiers e Cash Flow = ‘Cash In’ Minus ‘Cash Out’ — Calculated on a cash basis (which excludes changes in non-cash accrual of future liabilities) for simplicity. e One-Time Expenses = ‘Spending Minus Repayments’ for Non-Recurring Programs — Net costs of programs such as TARP, ARRA, and GSE bailouts. e Net Worth = Assets Minus Liabilities Minus Unfunded Entitlement Liabilities — Assets include cash & investments, taxes receivable, property, plant & equipment (as defined by Department of Treasury). — Liabilities include accounts payable, accrued payroll & benefits, federal debt, federal employee & veteran benefits payable... — Unfunded Entitlement Liabilities include the present value of future expenditures in excess of dedicated future revenues in Medicare and Social Security over the next 75 years. Note: USA Inc. accounts do not follow the same GAAP as corporations. i USA Inc. | High Level Thoughts 33 Common Financial Metrics Applied to USA Inc. in F2010 e Cash Flow Per Share = -$4,171 — USA Inc.’s F2010 cash flow -$1.3 trillion, divided by population of ~310 million (assuming each citizen holds one share of USA Inc.). e Net Debt to EBITDA Ratio = -8x — USA Inc. net debt held by public ($9.1 trillion) divided by USA Inc. F2010 EBITDA (-$1.1 trillion). It’s notable that the ratio compares with S8&P500 average of 1.4x in 2010. Note: USA Inc. accounts do not follow the same GAAP as corporations. Refer to slide 31 for a word of warning about comparing corporate and government accounting. EBITDA is Earnings Before Interest, Tax, Depreciation & Amortization. Source: Dept. of Treasury, White House Office of Management and Budget, Congressional Budget Office, BEA, BLS. www.kpcb.com USA Inc. | High Level Thoughts 34 HOUSE_OVERSIGHT_020858