by Nicholas Ballasy
"Over the long term, it is unsustainable for debt to grow faster than the economy grows," the GAO report says. The public debt is projected to "grow more than twice as fast as the economy over the next 10 years, reaching 123% of the size of the economy in 2036."
The federal government's financial trajectory is becoming increasingly unsustainable, according to a new Government Accountability Office report that warns rising debt and interest costs could create dire economic issues if policymakers do not take significant action soon.
In its annual fiscal health report to Congress released this week, the GAO said that publicly held debt was $31.3 trillion as of April 2026, which is "roughly equal to the size of the country's economy."
The public debt is projected to "grow more than twice as fast as the economy over the next 10 years, reaching 123% of the size of the economy in 2036."
Under current tax and spending policies, that figure is projected to continue climbing rapidly in the coming decades.
Deficits are expected to continue growing
"The federal government's long-term fiscal outlook presents risks and challenges that must be confronted," the report stated.
GAO projected that debt held by the public would surpass its previous record of 106% of GDP by 2029 and rise to 123% by 2036. Over the next three decades, the watchdog estimated the debt burden could swell to 251% of GDP. "Over the long term, it is unsustainable for debt to grow faster than the economy grows," the report said.
The agency attributed the worsening outlook to a persistent mismatch between government spending and revenue collection. For most of the past two decades, Washington had spent more money than it brought in, requiring increased borrowing to cover annual deficits.
GAO found that an aging population and rising healthcare costs would drive substantial increases in spending on Social Security, Medicare and other federal health programs. At the same time, revenue growth was not expected to keep pace.
The report noted that the federal government ran a primary deficit of $805 billion in fiscal year 2025, excluding interest costs. Under current policies, those deficits were projected to become larger over time.
Debt service on interest is one of the largest categories of federal spending
Meanwhile, interest payments on the national debt were consuming an increasingly large share of federal resources.
According to GAO, the government spent more than $970 billion on net interest payments in fiscal year 2025, which has made interest one of the largest categories of federal spending. The agency noted that Washington was spending more on interest than on national defense and nearly as much as it spent on Medicare.
Under current projections, interest costs were expected to continue accelerating and could reach nearly 10% of GDP by 2056.
"As of April 2026, publicly held debt was $31.3 trillion, roughly equal to the size of the country's economy," the watchdog reported. "Publicly held debt is projected to grow more than twice as fast as the economy over the next 10 years, reaching 123% of the size of the economy in 2036."
"We project that by 2044 the government will spend more on net interest than on Social Security," the report stated.
GAO urges Congress and the White House to develop a long-term fiscal strategy.
The GAO warned that the implications of further increases in the debt level extended beyond the federal government's budgetary balances. The increase in debt would raise borrowing costs for consumers and businesses, hinder economic growth, and constrain the government's capacity to handle emergencies.
In addition, the agency stated that the worsening fiscal outlook posed "serious economic, national security, and societal challenges," including "lower wage growth, higher prices, and higher interest rates for household and business loans."
To address the problems, the GAO urged Congress and the White House to develop a long-term fiscal strategy. The watchdog recommended establishing fiscal targets and budget rules designed to place debt on a more sustainable path.
Among the options discussed in the report were increasing federal revenues, reducing spending, reforming major entitlement programs, reviewing tax expenditures and addressing financing shortfalls in Social Security and Medicare.
The GAO estimated that maintaining debt at roughly 100% of GDP by 2056 would require either collecting 26% more revenue every year, cutting federal program spending by 21% annually, or adopting some combination of tax increases and spending reductions.
The report also emphasized that delaying action would only make the problem more difficult to solve in the future. "The longer actions are delayed, the more dramatic they will need to be," GAO warned. The agency additionally renewed its call to replace the current debt-limit process, arguing that the existing system "does not serve as a control on fiscal policy."
Nicholas Ballasy
Source: https://justthenews.com/government/federal-agencies/debt-balloon-123-entire-size-us-economy-2036-without-action-congress
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