“As the federal government’s publicly held debt continues to grow, the U.S. Government Accountability Office (GAO) today issued its annual report on the nation’s fiscal health. The report again warns Congress and the Administration about the federal government’s long-term fiscal path and calls for decisive action. As it has since 2017, GAO recommends a strategy be developed to inform the difficult policy choices in addressing our unsustainable fiscal path.  “With this report, we project that public debt will reach an unprecedented level by 2027,” said Gene L. Dodaro, U.S. Comptroller General and head of the GAO. “We’re calling on Congress and the Administration to act now to develop and implement a strategy to address this acute challenge. Inaction could result in great difficulties for many Americans and impede policymakers’ flexibility to respond to future economic recessions or unexpected events.” Unless spending and revenue policies change, the debt will continue to grow faster than the economy—even during times of growth. This is unsustainable. In fiscal year (FY) 2024, the government spent over $1.8 trillion more than it took in, marking the fifth year in a row with a deficit above $1 trillion. This gap will continue to grow as revenue is not expected to cover growing spending for mandatory programs like Social Security and Medicare. The government will have to keep borrowing to finance budget deficits each year. GAO projects that, absent a change in fiscal policy, debt held by the public will grow more than twice as fast as the economy over a 30-year period and will be double the size of the U.S. economy by 2047. Similar to other borrowers, the government has to pay interest on its debt. As the debt increases and interest rates rise, the government’s annual spending on interest costs have grown dramatically—and will continue to grow without policy changes. In FY 2024, the government spent $882 billion on net interest—more than was spent on national defense or Medicare. Annual spending on net interest has more than tripled since FY 2017, when it was $263 billion. We estimate spending on interest will be more than $1 trillion in FY 2025.  The growing debt and interest costs pose serious economic, security, and social challenges to the U.S. Higher interest rates for the government mean higher interest rates for individuals, households, and businesses. This adversely impact the lives of Americans who may experience higher borrowing costs, stagnant wages, and more expensive goods and services. Find out more with GAO’s new resource, How Could the Federal Debt Affect You? – GAO’s past and current work supports a strategy for long-term fiscal sustainability. That strategy, outlined in today’s report, calls on the federal government to:

• Establish fiscal rules and targets to address spending and revenue imbalances
• Address financing gaps for Social Security and Medicare
• Reduce improper payments and improve fraud risk management
• Replace the debt limit with an approach linking debt decisions to spending and revenue decisions. Statutory changes are needed to avert the risk of government default and its potentially severe consequences.”