America's Fiscal Future
GAO takes a big-picture look at the nation’s fiscal condition and offers resources to help policymakers get the nation on a more sustainable fiscal path.
The federal government faces an unsustainable fiscal future. In February 2025, we released our annual report on the nation’s fiscal health, highlighting both short-term and long-term risks.
Federal debt held by the public (that is, the total amount of money that the federal government owes to its investors) will continue to grow faster than the economy, which is unsustainable.
Federal debt held by the public—past, present, and future
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Historically, debt has decreased during peacetime and economic expansions. But this pattern has changed in recent decades. Unless current revenue and spending policies change, by 2027 debt will reach its historical high of 106 percent of GDP, according to our simulation. If unaddressed, it will grow more than twice as fast as the economy and reach 200 percent of GDP by 2047.
Why Is This a Problem?
The growing debt could create additional challenges for federal fiscal management, which could in turn cause challenges for American households and individuals, too. These potential challenges include:
Risks to economic growth and lower investment in the private sector. These issues could lead to slower wage growth due to losses in productivity.
Upward pressure on interest rates that would make it more expensive for individuals to borrow money—for example to purchase a car or home.
The debt is growing because the country keeps borrowing to finance an increasingly large gap between government spending and revenue.
The underlying conditions of the problem have existed for over two decades. Every fiscal year since 2002, the federal government has run a deficit—meaning it spent more than it collected in revenue—and added trillions of dollars to its debt.
Tracking program spending and revenue over time
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Demographic and other trends are contributing to the problem. The U.S. population is aging and health care costs are rising. These trends put pressure on Social Security and Medicare programs—both of which have been increasing spending since 2008 when the baby boom generation began to retire. And deficits could increase even more as higher interest rates combine with rising debt.
Another contributor to rising debt is the interest payments the federal government owes to its investors. In fiscal year 2024, federal net interest spending increased 14 percent from fiscal year 2023 (from $658 billion to $882 billion). That was more than the government spent on national defense or Medicare.
What’s the Solution?
Congress and the administration will need to make difficult budgetary and policy decisions to address persistent deficits and reduce the nation’s borrowing needs. The sooner the federal government takes action to address the nation’s fiscal outlook, the less drastic those efforts will need to be.
We continue to recommend that Congress and the administration develop a strategy for fiscal sustainability.
How Does GAO Help?
Fiscal simulation. We update this simulation each year to monitor the government’s long-term fiscal outlook. We also analyze the drivers of debt and the trends contributing to it. Find the details in our annual fiscal health report.
Debt sensitivity analysis. This analysis can give policymakers a more complete picture of how potential economic and fiscal changes to the variables in our simulation can affect the fiscal outlook. You can explore the effects of different variables on the debt in our interactive graphic.
Fiscal gap analysis. The fiscal gap is a way of quantifying the policy changes required to meet a given target debt ratio. It measures how much primary deficits must be reduced through policy changes (some combination of revenue increases or spending cuts) over a period of time. Explore the variables that affect the fiscal gap in our interactive fiscal gap calculator.
How Could Federal Debt Affect You?
The federal government’s debt is growing faster than the economy—this is unsustainable over the long term. Learn more about how the debt could affect you here.
