The Government Accountability Office (GAO) has issued its annual report on the nation’s fiscal health, painting a grim picture of America’s financial future. The report warns that the rapidly growing national debt poses a significant threat to the U.S. economy and calls for immediate, decisive action from Congress and the Administration.
Comptroller General Gene L. Dodaro emphasized the urgency of the situation, projecting that publicly held debt will reach unprecedented levels by 2027. He urged policymakers to develop and implement a comprehensive strategy to address the unsustainable fiscal path, warning that inaction could lead to severe consequences for Americans and limit the government’s ability to respond to future crises.
The report highlights the widening gap between government spending and revenue. In fiscal year 2024, the deficit exceeded $1.8 trillion – the fifth consecutive year above $1 trillion – and this gap is projected to grow as mandatory spending programs like Social Security and Medicare outpace revenue. GAO projects that, without policy changes, debt held by the public will be double the size of the U.S. economy by 2047.
A major contributor to the growing debt is the escalating cost of interest payments. In FY 2024, net interest spending reached $882 billion, surpassing spending on national defense or Medicare, and more than tripling since FY 2017. This figure is estimated to exceed $1 trillion in FY 2025. These rising interest rates impact not only the government but also individuals, households, and businesses through higher borrowing costs and potentially stagnant wages.
To address this looming fiscal crisis, the GAO recommends a multi-pronged strategy, including:
- Establishing fiscal rules and targets to balance spending and revenue.
- Addressing the long-term financing gaps for Social Security and Medicare.
- Reducing improper payments and improving fraud risk management.
- Replacing the debt limit with a mechanism that links debt decisions to spending and revenue decisions.
The GAO stresses that the longer action is delayed, the more drastic the necessary measures will become. The report urges Congress and the Administration to make difficult budgetary and policy decisions to curb the key drivers of the debt and steer the nation towards a more sustainable fiscal path.
GAO’s full report: “The Nation’s Fiscal Health: Strategy Needed as Debt Levels Accelerate”