The Government Accountability Office has issued a report warning Congress and the administration anew that the country is on an unsustainable fiscal path that, if not corrected, would pose serious economic, security and social challenges.
Debt Projections
GAO said that as of Dec. 31, 2024, federal debt was at $28.7 trillion and that at its current rate of growth, it will reach 106 percent of gross domestic product by 2027, one year sooner than previously projected. That percentage is the highest in U.S. history, last seen in 1946.
The government watchdog further warned that over the next three decades, federal debt is projected to grow more than twice as fast as the economy, and that at that rate, federal debt is expected to reach 200 percent of GDP by 2047, three years sooner than previously forecasted.
Drivers of Debt
According to GAO’s analysis, the growing federal debt is being driven by annual budget deficits, which has two components. The first is the deficit between government revenue and program spending as prescribed by policy. This deficit is expected to grow in part due to slower revenue growth relative to spending growth in Medicare, other federal healthcare and Social Security programs.
The second component is the interest from the money that has to be borrowed to pay for the first component. GAO said that since 2017, annual spending on net interest has more than tripled and is expected to continue growing.
Between the two, the government has more control over the primary component because it is based on policy decisions.
Structural Imbalance
For GAO, the time to put in place a sound fiscal strategy to address what the office described as the “structural imbalance between spending and revenue” is now. The office called on Congress to put into effect “a strategy to inform the difficult policy choices that are needed to put the government on a more sustainable fiscal path.”
