Exclusive: Mary Meeker's warning for "USA Inc."
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Mary Meeker speaks onstage at a Vanity Fair even in San Francisco, Calif. in 2016. Photo: Michael Kovac/Getty Images for Vanity Fair
America is the world's biggest business, and its shareholders — U.S. taxpayers — should be panicked about the state of their investment, says star Wall Street analyst-turned investor Mary Meeker.
Why it matters: For the first time since 2011, Meeker examined the financials of the U.S. the way she would analyze those of a public company. "USA Inc," however, has more at stake than any single corporation: America's worsening fiscal position could limit its ability to respond to economic or geopolitical threats down the line.
What they're saying: "Beneath the surface, financial 'results' — treating the government as if it were a corporation — conceal a buildup in structural weakness that can jeopardize our country's standing in the world," Meeker, who made her name during the dotcom boom, writes in a new report first seen by Axios.
The intrigue: Meeker, founder of venture capital firm Bond, does not mention in her report DOGE, Elon Musk's attempt to wield his business acumen to cut spending by at least $1 trillion.
- But Meeker said that improving the government's "operating efficiency" would ease spending, as originally proposed in her 2011 report.
By the numbers: If the government (by any method) reverted to the slower headcount growth trend seen from 1988 to 2009, that would imply 840,000 fewer workers in the next five years, according to Meeker's updated analysis.
- That would save more than $1.3 trillion over the coming decade.
- "USA Inc. could also focus intensively on local private company outsourcing, where state and local governments are finding real productivity gains," Meeker says.
The report updates a list of suggestions that appear aligned with Musk's philosophy — including pushing agencies and lawmakers to justify the expenses in proposed fiscal budgets.
Flashback: Meeker believed a 450-slide document published in 2011 would be her "one and done" alert on America's fiscal state. Warnings in the 2010s about higher borrowing costs are now the nation's reality.
- "Even as USA Inc.'s debt was rising for decades, plunging interest rates were keeping the cost of supporting it relatively steady," Meeker writes.
Now interest payments are swallowing government revenue, with spending on Medicare, Medicaid and Social Security set to explode.
- Entitlements and net interest payments will absorb all of the government's revenue this fiscal year, according to Congressional Budget Office estimates cited by Meeker.
- "With our demographics and our debts, we're on a collision course with the future," Meeker writes. "If we don't act very soon, which generation will be left holding the bag?"
Yes, but: No business has the borrowing and taxation powers of the U.S. government. Its scope of responsibilities are unmatched by any single corporation.
- For decades, Wall Street has warned about an impending fiscal crisis that would restrain the government's ability to borrow.
- In 2011, Meeker said that net debt levels were approaching "warning levels," though no fiscal crisis has emerged — at least not yet.
The bottom line: The government fiscal situation has deteriorated since Meeker's warning 14 years ago.
- Meeker says the "tide may now be shifting," though the realities of cutting spending where it would be meaningful — entitlements — look as politically impossible as ever.
