The Nation's Fiscal Health: Urgent and Sustained Action Needed to Improve the Fiscal Outlook

Summary

What GAO Found The federal government is on an unsustainable fiscal path that poses serious economic, national security, and societal challenges if not addressed. Nearly every year this century, the government has spent more than it collected in revenue. To finance these deficits, the government has had to borrow by issuing debt. If current spending and revenue policies continue, the nation’s fiscal outlook is projected to deteriorate further, as debt accumulates at a faster rate than the economy grows. GAO projects that under current revenue and spending policies, debt held by the public will reach its historical high of 106 percent of gross domestic product (GDP) by 2029 and grow to 251 percent of GDP in 2056. Debt Held by the Public Projected to Grow Faster than the Economy Projected deficits are driven by projected growth in program spending—largely from Social Security, Medicare, and other federal health care programs—and in interest costs. Under current policy, spending on net interest will be the fastest growing portion of the federal budget and represent an increasingly large share of total spending. The magnitude of policy changes needed to create a sustainable fiscal future for the federal government requires a coordinated strategy that includes fiscal rules to encourage fiscal discipline (and as an alternative to the debt limit); builds consensus about how to reduce annual deficits; addresses financing gaps in the Social Security and Medicare trust funds before they are depleted in 2032 and 2033, respectively; and considers other opportunities to improve fiscal responsibility. Congress and the administration will need to make difficult budgetary and policy decisions to address the key drivers of debt and improve the government’s fiscal outlook. The longer actions are delayed, the more dramatic they will need to be. Why GAO Did This Study GAO produces this annual fiscal health report to examine the current fiscal condition of the federal government and its future fiscal outlook, absent policy changes in revenue and program spending. The report is based on the results of GAO's fiscal simulation using information available as of February 2026. This report presents GAO’s projections—under current policy—of (1) federal debt; (2) primary deficits (the gap between program spending and revenue); (3) interest costs and (4) revenue and spending changes needed for a sustainable fiscal outlook.