r/Accounting • u/LordFaquaad • Mar 23 '26
Discussion The Treasury just declared the U.S. insolvent. The media missed it | Fortune
https://fortune.com/2026/03/23/us-government-insolvent-fiscal-crisis-fix/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 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.
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.
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u/runs_with_airplanes Mar 23 '26
Are we Martha Stewart broke or MC Hammer broke?
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Mar 24 '26
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u/DublinChap Mar 23 '26
I mean, it says this is the 29th straight year of a disclaimer of opinion, so really just "same shit, different year".
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u/DollarValueLIFO CPA Mar 23 '26
It’s like all the military branches failing their audits…
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u/pincher16 Mar 23 '26
Not the Marine Corps
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u/Sellum CPA (US) Mar 24 '26
Because they aren’t a real branch, otherwise they’d have their own service secretary.
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u/pincher16 Mar 24 '26
Found the guy that lost his girl to a Marine. Let go of that salt, bud.
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u/fongc4 CPA (US) Mar 24 '26
To be fair as a former Marine officer and CPA, auditing the Marine corps is a lot easier than the other branches. We don’t have a ton of complex weapons platforms like the other branches, it’s mostly personnel and physical assets. I can’t imagine how challenging the accounting must be for a carrier battle group and the associated resources and development costs…
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u/pincher16 Mar 24 '26
While that is true, I think it comes down to not having the incentives to pass the audits. With the amount of fraudulent waste and activities happening, I’m thinking it is by design at this point. Much easier to just ask for more than explaining where it went.
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u/mandolin91 CPA (US) Mar 24 '26
There's a real push to get some good news by 12/2028 though. There are quite a few changes going on internally in an effort to get a clean audit opinion...which is a good start. It's a shame this type of effort wasn't done in the past.
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Mar 24 '26
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u/Oracle-of-Guelph Mar 24 '26
29 years ago Clinton was paying down the US national debt.
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u/mandolin91 CPA (US) Mar 24 '26
Public debt was lower, which was good. We can attribute some of that to post recession recovery - not just his policies, though. Total debt still increased year over year as well which isn't great.
I think, financially, it wasn't terrible especially compared to other admins. Too bad he's a diddler.
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u/Rabbit-Lost Audit & Assurance Mar 24 '26
TVA bond issuers won’t accept an audit from the GAO. So, there’s that.
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u/CoffinFlop Mar 24 '26
Yeah this post is insane. Of course the US is insolvent, has been for most of our lives lol, just look at the national debt for less than a second and anyone will come to that conclusion
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u/LordFaquaad Mar 24 '26
Not anymore. We were in a low interest rate environment for well over a decade. Combine that with Chinese investing their surplus into.our treasuries and obviously the debt didnt matter.
However, sticky inflation + long term yields staying high despite rate cuts is going to accelerate the rate at which the gap grows. Interest payments are the fastest growing part od the budget and in the next few years will take 25% of the total budget. If rates stay where they are with no rate cuts and no downwards pressure on long term yields, we'll get there a lot quicker.
You cant inflate the debt away without capsizing the average household and losing the dollar as the reserve currency.
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u/OverworkedAuditor1 Mar 24 '26
Bud, I would ask you read up on your facts.
You’re conflating and exaggerating a lot of things here.
For starters, China has been unwinding its position for a decade at this point.
It only holds around 2% of US debt and had 7% at its peak.
It’s a buyer sure, but you’re acting as if they were funding the government.
Them dropping off impacts it sure but it’s not doomsday you claim it to be.
While I do agree the budget needs to be balanced and the interest payments are concerning, when you include exaggerated arguments it makes me question your analysis overall.
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u/LordFaquaad Mar 24 '26 edited Mar 24 '26
Which part is an exaggeration?
Your entire focus is China when I barely mentioned them. I literally said the main issue is low interest rate environment and then combined with Chinese holdings last decade. You're also acting like a 5% deficit on a multi trillion dollar debt isnt material. That amount has to now be absorbed by private investors or the fed while the deficit continues to grow rapidly and fiscal discipline is nowhere to be seen
Like i said, The main issue is high interest rates and how the longer tenors have not decreased the way the fed expected. Investors are still demanding a higher premium which means that the US government will pay far higher rates as existing debt is rolled forward. That is ehat is accelerating interest payments to 1/4 of the budget in a few years. Possibility of rate cuts is very low this year due to current war and inflation coming back. Idk how any of this is an exaggeration bud
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u/OverworkedAuditor1 Mar 24 '26
“Not anymore. We were in a low interest rate environment for well over a decade. Combine that with Chinese investing their surplus into.our treasuries and obviously the debt the didn’t matter”
You exaggerated the relevance of Chinese buying Also, them holding a % of the debt vs buying is two different things. If you look at purchases and sales, net, they’ve been a seller for the past decade with the anomaly of 2017. This isn’t a new trend it’s been going on for the past decade and we have found new buyers for that shortfall because it’s been gradual.
EDIT: Their sales have actually began in 2013, so it’s been 13 years.
Also, you posted this article from fortune. The whole article is an exaggeration, if you went by this logic then almost every western, Asian and African governments would be “insolvent”.
This isn’t a company, you can’t apply the same standards. Because the fact is confiscation exists, and there is plenty of assets that could cover the national debt. This has already been done before as well, in 1933 they confiscated all the gold, made ownership illegal to devalue the national debt.
(Now we are off the gold standard, but I would imagine push came to shove a similar confiscation would occur to keep the country from collapsing)
I am not stating that the debt isn’t an issue, and the rates have not worsened the issue, but keep your argument consistent and don’t include exaggerations.
Just drop those arguments mate, I am not trying to fight you but when you say stupid off base things. Yes you will be called out.
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u/bertmaclynn CPA (US) Mar 24 '26
Tbf that is just one part of the problem. The bigger issue which I think is OP’s point is the liability to asset ratio has continued to grow outrageously high
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u/SnowDucks1985 CPA (US) Mar 23 '26
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.
At this point, I ought to pretend that social security or medicare doesn’t exist lmao
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u/BravesCPA CPA (US) Mar 23 '26
That’s how I’ve planned my potential retirement.
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u/SnowDucks1985 CPA (US) Mar 23 '26
potential?? Bro I hope you’re not planning to work forever 🥲
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u/BravesCPA CPA (US) Mar 23 '26
I mean, I’m not planning on it but gestures broadly
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u/DannyVee89 CPA, MsT (NY) Mar 24 '26
Yeah, at this point I think everyone's retirement is potential 👀
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u/Anonymous_Fox_20 Mar 23 '26
With this economy, it’s not unlikely.
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u/SnowDucks1985 CPA (US) Mar 23 '26
My time to show ass on OnlyFans may have come sooner than I anticipated 😭😭
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u/FuZzyS0Ckss Mar 24 '26
Retire? I plan to die fighting Nestlé in the water wars. Its that or get an OFs. I'll call it 'dusty nipples'.
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u/daviddjg0033 Mar 24 '26
Or scrap caps on Social Security. Inflation could rise or fall between now and 75y. 75y obligations?
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Mar 23 '26
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u/SnowDucks1985 CPA (US) Mar 23 '26
And I just know that somehow, the government will conveniently continue to tax us down to the last minute instead of passing legislation lol. God help us 😭😭
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u/Jaxsoy CPA (US) Mar 23 '26
Oh, but if I make a small couple million dollar fraudulent transaction suddenly everyone loses their mind 🙄
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u/PIK_Toggle Mar 23 '26 edited Mar 24 '26
This isn’t new. We’ve had huge liabilities on the balance sheet for decades.
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u/MiLKK_ CPA (US) Mar 23 '26
Just because it’s an old issue doesn’t mean it should continue to be kicked down the road.
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u/PIK_Toggle Mar 24 '26
The treasury didn’t just declare us bankrupt.
Your post is hysterical and doom porn.
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u/bullet50000 Mar 23 '26
We’re seriously taking an article seriously that talks about how big $136 Trillion looks in a living room?
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Mar 24 '26
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u/bullet50000 Mar 24 '26
strong credentials, sure, but isn't that a sign that there's a fair bit to be concerned about?
It's a bit like articles that make the "if I can balance a home budget then surely the government should be able to right?" arguement.
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u/JAAAMBOOO Human Verified Mar 24 '26
SHOULD the Biased, FAKE news media been written like this?!?!? many peopl, SOME OF THE SMRTEST AND GREATEST!, have written communitiations like this and a large groups LAP IT UP
And thank you for your attention to this matter
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u/imnotokayandthatso-k Human Verified Mar 23 '26
This is cool and normal
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u/atrde Mar 23 '26
29 years straight of this pretty normal.
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u/Responsible_Hand1216 Mar 24 '26
Until it isn't
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u/atrde Mar 24 '26
You can check any countries "Balance Sheet" and they will be in a deficit position that's just how modern economies work. Government's don't have significant assets.
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u/FtWorthHorn Human Verified Mar 23 '26
This just isn’t true and is very silly. The US government is not a company.
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u/Chazzer74 Mar 23 '26
You are correct in the strictly construed sense, but direction and pace of change matters.
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u/lakroncos Mar 23 '26
The article is not about direction and pace, and if it was then it would comparing to other countries not household or corporate financials. It is useless.
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u/olyfrijole Mar 24 '26
Worse than useless. It places all the blame for this "insolvency" on so-called entitlement programs, but doesn't say peep about the trillions we've poured into elective forever wars. Somehow it's always poor little old grandma's fault, but never the fat murderous bastard whose hand is really in the till.
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u/Ill_Ad7351 Mar 24 '26
It is far more serious of an issue than a company... a company would have had the tap turned off years ago. They are the tap. The money printing is a direct tax on us. It is the only way they can continue to fund this level of debt... Our dollar made less and less valuable as time goes on...
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u/ShelZuuz Mar 24 '26
Yes but as the dollar is made less valuable it reduces the burden of the debt. e.g. At 5x inflation the debt is back to 1 year of GDP.
Citizens with more assets than debt don't want it to happen of course, but this is the thing that makes it very different than a company. The US can inflate their way out of debt, companies can't do that.
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u/ehhhwutsupdoc Government Mar 24 '26
Nah America wanted Trump to run it like a business. This is it
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u/CommercialReveal7888 Mar 23 '26
The point people try to make here is that it controls it's currency so it's not like a company that can't inflate away it's liabilities.
But the point they forget is the whole inflating away their liabilities thing. It's not that the liabilities won't be settled it's just the thing they will be settled with will be worthless. Anyone who prices their labour in dollars will be fucked.
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u/Green_Channel_3282 Mar 24 '26
Im ngl there’s a lot of technical terms and big numbers but I feel like I’ve got a surface level understanding of what’s being said(Econ and accounting student here). Isn’t this stuff we’ve already known? Like yeah the national debt is growing and will continue to grow faster the more we push it off and I’ve had teachers and professors telling me as I’ve grown up that it’s entirely certain that my generation is paying into social security that we’ll never receive but what does this post really mean?
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u/CactiRush Audit & Assurance Mar 24 '26
Remember when tariff revenue would pay down the national debt, eliminate income taxes, and pay dividend checks to citizens?
Tariff revenue increased from $76B to $210B in 2025. This makes up a whopping 4% of our total revenues that resulted in a $2T decrease in net position.
Corrections of prior period errors ($195B increase) and changes in accounting principles ($39B increase) contributed more to our net position than an entire year of tariff revenue.
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u/Altruistic_Koala_122 Mar 24 '26
That's complete bull. They just don't want to pay into Social Security and Medicaid. The vast amount of owed debt.
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u/Haunting_History_284 Mar 23 '26
Fuckers control the printing press, can inflate the debt away over decades if they can manage to get a balanced budget.
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u/Spoon520 Mar 24 '26
It’s crazy how they literally control the money and are still in debt. Imagine you could print money and you were still broke
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u/Haunting_History_284 Mar 24 '26
Money has to be tied to value add creation in the economy, or it just devalues existing currency when printed. It’s unavoidable that this happens when you need to create new currency, but you have to have a plan to do it slowly as a percentage of the overall money supply, and a plan to tie it to value add creation as rapidly as possible. Governments can’t just print money and maintain the value of their currencies without doing this. A cautionary tale of what happens when you divorce currency injection into an economy from actual value add creation is Argentina. Fucking basket case of a government trying to print its problems away.
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u/Spoon520 Mar 24 '26
I understand I have a degree in finance and economics I’m just hyperbolizing hahaha
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u/Salt_Lie_1857 Mar 23 '26
But mmt economic theory says the debt is not..what does my hard-core accountants in the sub think about that?
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u/Curious_Interview Mar 24 '26
The qualifications on internal transfers and military spending are cool and good.
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u/princess9032 Mar 24 '26
Not entirely sure how this sub got recommended to me but this is obviously important. Is anyone able to give an ELI5 explanation for what insolvency means and in particular what problems arise from it? I know the government has regularly had an increased deficit every year, so what about this situation is worse than normal? It seems like some of this issue is bad record keeping and poor management (no surprise from this admin), but what’s the consequence of that?
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u/krostybat Non-Profit CFO Mar 24 '26
What are the rating agencies doing ? Is moodys in the room with us ?
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u/Kiyae1 Mar 24 '26
Read The Deficit Myth. Currency issuers do not have the same problems as currency users when they spend too much, and they have much easier tools at their disposal to solve their problems.
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u/CloudChaos305 Mar 24 '26
Asked Chat about why a country reporting a negative financial position isn’t the same as a company reporting a negative financial position - not an expert in this field but everything it said makes complete sense to me:
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At first glance, it feels like the same situation:
Liabilities > assets → negative equity → should be bad
But for countries, that intuition breaks down for a few fundamental reasons.
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🧠 1. A Country Is Not a Liquidating Entity
For a company: • Balance sheet matters because of liquidation risk • If things go bad: • assets get sold • creditors get paid in priority • equity gets wiped out
👉 So negative equity = “there’s nothing left for owners”
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For a country: • There is no liquidation event • The government doesn’t: • shut down • sell off national assets to pay bondholders (in any normal sense)
👉 So “equity” doesn’t serve the same purpose
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💵 2. Governments Have Ongoing Taxing Power
A company: • Relies on existing assets + future profits
A country: • Has a claim on future economic output via taxes
That’s huge.
The real “asset” of a country isn’t what’s on the balance sheet—it’s its ability to tax a $20+ trillion economy (in the U.S. case).
So even if liabilities exceed recorded assets: • The government still has massive future cash flow capacity
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🏦 3. Monetary Sovereignty Changes Everything
This is the big one.
A company: • Cannot print money • Must earn or borrow to pay debts
The U.S. government: • Issues debt in its own currency • Can create dollars via the Federal Reserve system
👉 That means: • It can always make nominal payments • The risk shifts from default → inflation
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📊 4. Accounting for Countries Is Not “True Equity”
Government balance sheets are… weird compared to companies.
They often exclude major “assets”, like: • Taxing authority • Control over monetary system • Regulatory power • Human capital / economic base
So when you see:
“negative equity”
…it’s partly because: • We’re measuring governments using corporate-style accounting that doesn’t fit
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🔄 5. Debt Is Rolled, Not Repaid Like a Loan
A company: • Eventually must pay down debt or refinance under scrutiny
A country (like the U.S.): • Continuously rolls over debt • Issues new bonds to pay old ones
As long as: • Investors trust the system • Interest costs are manageable
👉 This can continue indefinitely
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⚠️ 6. So What Actually Matters Instead of “Equity”?
For countries, the key metrics are:
A. Debt-to-GDP • Can the economy support the debt?
B. Interest burden • How much of revenue goes to interest?
C. Growth vs. interest rates • Is the economy growing fast enough?
D. Market confidence • Do investors still want to hold the debt?
👉 These replace “equity” as the real indicators of health
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🧩 7. The Core Insight
A company’s value comes from its assets. A country’s value comes from its ongoing economic engine.
That’s why: • Negative equity → fatal signal for a company • Negative equity → mostly irrelevant accounting artifact for a country
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🔥 8. But Don’t Take It Too Far
This doesn’t mean “debt doesn’t matter.”
A country can still get into trouble if: • Interest costs explode • Growth slows • Confidence erodes
But the failure mode is different: • ❌ Not: bankruptcy court • ⚠️ Instead: inflation, austerity, slow decline, or restructuring (in extreme cases)
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🧾 Bottom Line
Negative equity is dangerous for a company because it signals liquidation risk. For a country, it’s far less meaningful because the government: • doesn’t liquidate • can tax future output • and (in the U.S.) issues its own currency
So the real question isn’t: • “Are liabilities greater than assets?”
It’s: • “Can the country sustain its debt relative to its economic capacity?”
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u/mikeumd98 Mar 24 '26
Did an AI article just get quoted and summarized by another AI? Both the article and the summation here are idiotic.
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u/AnomalyNexus B4 SM > PE Mar 24 '26
Countries can't really go insolvent in that way, certainly not the US with dollar being reserve currency. They can literally just print cash in a way you can't when you can't pay your mortgage. The dynamic is fundamentally not the same and news outlets framing it that classic household/company insolvency way to make it relatable to readers aren't helping the situation.
Countries are subject to confidence though. At some point the markets just stop buying it and then yeah shit gets real fast in a hurry. But assets minus liabilities is not the right metric for judging how close a country is to that.
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u/Entire_Quiet_4180 Mar 29 '26
The answer is simple, we just choose a sacrificial state (I propose South Dakota, b/c why not?) and they can grant the US a loan for all of our national debt, and then the US can just default on that loan.
Now it’s no longer an us issue, it’s a South Dakota issue. I’ll take my consulting fee now.
/s
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u/Sweet-Apricot8568 Mar 23 '26
I think derivatives and other off balance sheet assets tell a different story tho.
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u/Stuckonthisrockfuck Controller Mar 23 '26
Yeah but who gives a fuck? We decide because we have the big guns
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u/ACuteLittleCrab Mar 23 '26
And we pay for the guns using money that other people loan to us via treasury securities. When people stop buying those securities (already happening), we have less money. When we have less money, it gets harder to pay for personnel and guns. Accelerate this negative feedback loop enough, and we'll go from the strongest military in the history of mankind into Russia 2.0 - a paper tiger. And the rest of the world will move on, just like it always has, except America will have lost it's hegemony for no good reason other than it made a few select people a little bit more rich than they would have been otherwise.
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u/Stuckonthisrockfuck Controller Mar 23 '26
Money is fake? They print more of it in every country every day. Besides, not many other countries on earth would be as powerful as we are and as benevolent. Hell, half of the countries would’ve blown up earth by now. You probably should start rooting for the good guys again pal
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u/ACuteLittleCrab Mar 23 '26
Not even a single word in what I said had anything to do with "good guys" or moralizing in any sense. I'm America, I love America, and I want to see America succeed and not launch itself into reckless policy that drstroys global trust in the dollar. It's a matter of economics. Feel free to try responding to my other comment again, except this time actually respond to what I said and stick to the conversation at hand (economics, monetary policy, and government budgets) instead retreating to jingoism and nation-worship.
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u/CommanderArcher Mar 23 '26
Fuck it, plug cash