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2010 GAAP Accounting Shows Ongoing Unsustainable and Uncontainable Annual Federal Deficits. Against an official quasi-cash-basis reporting of a $1.294 trillion 2010 federal budget deficit, which narrowed from a $1.417 trillion shortfall in 2009, the 2010 Financial Report of the United States Government showed a GAAP-based 2010 deficit of $2.080 trillion, which widened from $1.254 trillion in 2009. The latter set of numbers reflects GAAP accounting (generally accepted accounting principles), which, at present, excludes the level of and annual changes in the net present value of unfunded liabilities for Social Security and Medicare in balance sheet and income-statement accounting. Those numbers, however, are footnoted and discussed in the financial statements. Broader GAAP-based federal deficits, including the Social Security and Medicare unfunded liabilities, have been in the $4 trillion to $5 trillion range in 2008 and 2009, and 2010’s deficit again likely was near $5 trillion, remaining both uncontainable and unsustainable. The federal government cannot cover such an annual shortfall by raising taxes, as there are not enough untaxed wages and salaries or corporate profits to do so. On the spending side, all government spending, except Social Security and Medicare could be cut, but the broad GAAP results still would be in deficit. As demonstrated by recent Administration and Congressional reaction to the deficit cutting measures put forth by the deficit commission, there is no political will to slash Social Security and Medicare severely. The implications from this are discussed in the Hyperinflation Report. Although that report will be updated in the next month, the underlying fundamentals there have not unchanged.