Note: This post was written by Claude Opus 4.6. The following is a synthesis of reporting and primary source analysis from the U.S. Treasury, GAO, Fortune, and other outlets.
On March 19, the Government Accountability Office published its annual audit of the U.S. government’s consolidated financial statements. Four days later, a Fortune op-ed by economist Steve Hanke and former Comptroller General David Walker put the numbers in plain language: the United States is, by any standard balance-sheet reading, insolvent.
The media largely ignored both.
What the Numbers Actually Say
The Treasury’s Financial Report of the United States Government for fiscal year 2025 shows:
| Item | Amount |
|---|---|
| Total assets | $6.06 trillion |
| Total liabilities | $47.78 trillion |
| Negative net position | -$41.72 trillion |
Liabilities are nearly eight times assets. The balance sheet worsened by $2.07 trillion in a single year, driven by a $2 trillion increase in federal debt and interest payable (now $30.33 trillion) and a $438.8 billion jump in federal employee and veteran benefits payable (now $15.47 trillion).
But those are just the on-balance-sheet numbers.
The Off-Balance-Sheet Problem
The Treasury discloses Social Security and Medicare obligations separately in the Statement of Social Insurance. The 75-year unfunded obligation for those programs surged $10.1 trillion in one year — from $78.3 trillion to $88.4 trillion. Medicare Part B shortfalls alone jumped $6.9 trillion. Social Security added $2.5 trillion.
Combine on and off-balance-sheet obligations and the total exceeds $136 trillion — roughly five times annual U.S. GDP. Divided across the U.S. population of 341.8 million, that’s approximately $398,500 per person — every man, woman, and child, regardless of age.
Hanke and Walker translated this into household terms by dividing by 100 million: a family earning $52,446 a year, spending $73,378, carrying $1.36 million in total obligations against $60,554 in assets. The per-person share alone is more than seven times that household income figure. The metaphor is imperfect — households can’t tax or print currency — but the scale is sobering.
29 Years Without a Clean Audit
The GAO issued a disclaimer of opinion on the FY 2025 financial statements. That’s the 29th consecutive year the nation’s auditor has been unable to determine whether the government’s books are fairly presented.
Three persistent problems drive the disclaimer: serious financial management failures at the Department of Defense, an inability to reconcile transactions between federal agencies, and weaknesses in the process for preparing the consolidated statements. Several other major agencies, including the Small Business Administration, also failed to obtain clean audit opinions.
The government reported $186 billion in improper payments for FY 2025 — and that figure excludes programs that didn’t submit estimates.
Is “Insolvent” the Right Word?
This is where the debate gets interesting. The underlying data is not in dispute. But “insolvency” means something specific, and sovereign governments aren’t companies.
The United States issues debt denominated in its own currency. It has taxing authority over the world’s largest economy. It controls the global reserve currency. These are advantages no private firm possesses, and they mean the U.S. government can service its debts in ways a bankrupt corporation cannot.
Walker and Hanke know this — Walker ran the GAO for a decade. Their argument is that the trajectory, not the current moment, is the crisis. The Treasury’s own projections show debt-to-GDP reaching 200% by 2047 and 535% by 2099 under current policies. Every decade of delayed reform increases the required fiscal adjustment: 4.3% of GDP if changes begin in 2025, rising to 6.3% if postponed to 2045.
The fiscal gap is real. The question is whether “insolvent” clarifies or inflames.
The Swiss Model
Both authors point to two congressional proposals. The Fiscal Commission Act (H.R. 3289), sponsored by Representatives Bill Huizenga and Scott Peters with 41 co-sponsors, would create a bipartisan commission to confront the fiscal trajectory. House Concurrent Resolution 15 would propose a constitutional amendment modeled on Switzerland’s Debt Brake.
Switzerland adopted its Debt Brake by referendum in 2001 with 85% voter approval. The rule caps federal spending at cyclically adjusted revenue levels while allowing flexibility during recessions and emergencies. Since implementation in 2003, Switzerland has cut its debt-to-GDP ratio from 49% to below 30% — through two global crises.
Whether the U.S. political system can sustain that kind of discipline is an open question. But the authors’ point stands: the numbers are getting worse faster than the conversation about them.
Sources
- U.S. Treasury - Financial Report of the United States Government, FY 2025
- U.S. Treasury - An Unsustainable Fiscal Path
- GAO - Financial Audit: FY 2025 and FY 2024 Consolidated Financial Statements
- Fortune - The Treasury just declared the U.S. insolvent. The media missed it
- The Deep Dive - Is US gov’t broke? Treasury 2025 filing shows $41.7T negative net position
- Swiss Federal Department of Finance - The Debt Brake