The U.S. Treasury’s latest financial statements show the federal government is insolvent, with liabilities nearly eight times its assets and a widening fiscal gap. The report shows a troubling underlying trend, with the national debt is on track to reach levels never seen outside of wartime— projected to climb to roughly 120% of GDP within the next decade. That means that the federal government would owe more than the entire annual output of the US economy.
The numbers show the U.S. has $6.06 trillion in assets and $47.78 trillion in official liabilities as of Sept. 30, 2025. That excludes $88.4 trillion in unfunded Social Security and Medicare obligations.
According to the report, the government’s consolidated balance sheet position, excluding the SOSI, deteriorated by nearly $2.07 trillion between FY 2024 and FY 2025, reaching a negative $41.72 trillion. Total liabilities are now nearly eight times the value of reported assets.
The largest drivers were a $2 trillion increase in federal debt and interest payable (now $30.33 trillion) and a $438.8 billion increase in federal employee and veteran benefits payable (now $15.47 trillion).
The off-balance-sheet picture is even worse. The 75-year unfunded social insurance obligation surged by $10.1 trillion in a single year, rising from $78.3 trillion in FY 2024 to $88.4 trillion in FY 2025 — driven primarily by a $6.9 trillion jump in projected Medicare Part B shortfalls and a $2.5 trillion increase for Social Security. The Treasury’s Statement of Long-Term Fiscal Projections shows the 75-year fiscal gap widening from 4.3% of GDP in FY 2024 to 4.7% in FY 2025.
If the $88.4 trillion in 75year off-balance-sheet obligations were added to the $47.8 trillion in official balance sheet liabilities, total federal obligations would now exceed $136.2 trillion — roughly five times U.S. annual GDP.
The Government Accountability Office (GAO) issued a disclaimer of opinion on the U.S. government’s FY 2025 financial statements — the 29th consecutive year it has been unable to determine whether the statements are fairly presented. This is primarily due to serious, ongoing financial management problems at the Department of Defense and weaknesses in accounting for interagency transactions. House Budget Chair Jodey Arrington and bipartisan allies are urging structural reforms, including the Fiscal Commission Act and an Article V Convention to mandate fiscal responsibility.
Arrington notes it took 200 years for U.S. debt to reach $1 trillion, but now interest costs alone exceed that annually, surpassing the defense budget. Proposals range from capping deficits at 3% of GDP to enshrining balanced budget rules in the Constitution, reflecting deep concern over Congress’s inability to act.
Treasury data for January shows a net $25 billion outflow from U.S. financial markets, with private investors pulling $76.1 billion while foreign official institutions added $51.1 billion. Despite these outflows, foreign residents still bought $63.5 billion in long-term U.S. securities, including $42 billion from private investors. The mixed flows, including reduced holdings of Treasury bills and lower U.S. bank liabilities to foreigners, may indicate shifting global demand for U.S. assets.
If the U.S. government becomes or is insolvent— meaning it cannot meet its financial obligations or pay interest on its debt—it would likely trigger a catastrophic global financial crisis, a severe recession, and a dramatic devaluation of the U.S. dollar. A default could freeze credit markets, halt federal payments for millions of Americans, and cause a stock market collapse, wiping out trillions in wealth.
Estimates suggest a temporary default could cost 1.5 million jobs, while a prolonged crisis could erase over 7 million jobs, causing a severe, self-inflicted recession and economists projecting a massive reduction GDP. To pay debts, the government might print money, creating massive inflation. Borrowing costs for businesses and consumers would rise sharply, making mortgages and loans prohibitively expensive.