The U.S. government is insolvent. That’s not hyperbole — it’s the conclusion drawn directly from the Treasury Department’s own consolidated financial statements for fiscal year 2025, released last week to near-total media silence. The numbers: $6.06 trillion in total assets against $47.78 trillion in total liabilities as of September 30, 2025.

Importantly, the $47.78 trillion in reported liabilities does not include the unfunded obligations of social insurance programs like Social Security and Medicare — those are disclosed separately in the off-balance-sheet Statement of Social Insurance (SOSI).

The government’s consolidated balance sheet position, excluding the SOSI, deteriorated by nearly $2.07 trillion between FY 2024 and FY 2025, reaching a staggering negative $41.72 trillion. Total liabilities are now nearly eight times the value of reported assets. The largest drivers were a $2 trillion increase in federal debt and interest payable (now $30.33 trillion) and a $438.8 billion increase in federal employee and veteran benefits payable (now $15.47 trillion).

The Off-Balance-Sheet Iceberg

The off-balance-sheet picture is even more alarming. The 75-year unfunded social insurance obligation surged by $10.1 trillion in a single year, rising from $78.3 trillion in FY 2024 to $88.4 trillion in FY 2025 — driven primarily by a $6.9 trillion jump in projected Medicare Part B shortfalls and a $2.5 trillion increase for Social Security. The Treasury’s Statement of Long-Term Fiscal Projections shows the 75-year fiscal gap widening from 4.3% of GDP in FY 2024 to 4.7% in FY 2025.

If the $88.4 trillion in 75-year off-balance-sheet obligations were added to the $47.8 trillion in official balance sheet liabilities, total federal obligations would now exceed $136.2 trillion — roughly five times U.S. annual GDP.

The Government Accountability Office (GAO) issued a disclaimer of opinion on the U.S. government’s FY 2025 financial statements — the 29th consecutive year it has been unable to determine whether the statements are fairly presented. This is primarily due to serious, ongoing financial management problems at the Department of Defense and weaknesses in accounting for interagency transactions.

What $136 Trillion Looks Like in Your Living Room

Not only has the financial press ignored the consolidated financial statements, but most members of Congress and members of the general public will not read the consolidated financial statements. Documents like the consolidated financial statements are not the kind of thing you want to read before driving. If that’s not bad enough, most people cannot relate to the trillion-dollar numbers in the financial statements. Therefore, it is appropriate to translate them into terms that people will understand.

America does not look like a nation in fiscal distress—and that’s exactly the problem.

The S&P 500 has more than doubled in the past five years. Unemployment is at a multi-decade low. Social Security checks are going out.

But moments like these can hide deeper vulnerabilities. Rising tensions in the Middle East, including the conflict with Iran, are a reminder of how quickly economic conditions can shift. A disruption to global oil supplies could send energy prices higher, reigniting inflation and pushing interest rates upward. For a country already carrying more than $38 trillion in debt and spending more on interest than on national defense, that kind of shock would put even greater strain on federal finances.

And the underlying trend is already troubling. The national debt is on track to reach levels never seen outside of wartime—projected to climb to roughly 120% of GDP within the next decade. That means that the federal government would owe more than the entire annual output of the US economy.

That trajectory will not trigger an alarm bell overnight. As Ernest Hemingway wrote, bankruptcy happens “gradually and then suddenly.” The same can be true of fiscal decline.

A bipartisan fiscal commission offers a structured, credible forum for lawmakers to put everything on the table and produce a package of reforms capable of stabilizing the nation’s finances before gradual erosion becomes genuine crisis.

The US has over $38 trillion of national debt. We now spend more annually on interest than on the military. The primary trust funds for Social Security and Medicare are also projected to become insolvent within the next seven years, requiring an automatic benefit cut or even more deficit spending to backfill these programs. These pressures will intensify as the population ages, health care costs rise, and economic growth slows.

For American businesses, the looming debt crisis carries tangible, real-world consequences. High levels of government debt require the federal government to spend more on interest payments, leaving fewer resources available for infrastructure, education, national defense, and social programs. If investors begin to view US debt as riskier, interest rates could rise further, increasing borrowing costs for expansion, hiring, and investment.

The U.K. offered a preview. In 2022, Prime Minister Liz Truss announced some of the largest tax cuts in decades primarily financed via deficit spending, financial markets were rattled, causing precipitous declines in the value of the pound and threatening the solvency of British pension funds. Within weeks, the prime minister and the country’s finance head were forced to resign. The U.S. economy is larger and the dollar holds reserve currency status—but the dynamic of confidence lost suddenly after building gradually is the same.