GAO Warns Federal Debt Has Surpassed the Size of the U.S. Economy

The Government Accountability Office is warning that publicly held federal debt has temporarily surpassed the size of the U.S. economy, marking the first time the debt has crossed that threshold since the aftermath of World War II.

In its 10th annual report on the nation’s fiscal health, released June 11, 2026, the congressional watchdog said the debt is projected to remain above the size of the economy in coming years under current policies. GAO said the debt could reach 120% of the size of the economy by 2036 if policymakers do not change course.

The report adds urgency to a long-running debate over federal deficits, taxes and spending. GAO said debt is projected to grow about twice as fast as the economy over the next 10 years, a gap that would make the debt burden increasingly difficult to stabilize.

What GAO is projecting

GAO’s warning focuses on publicly held debt, the portion of federal borrowing held outside the federal government. The agency said that measure has temporarily moved above the size of the U.S. economy and is projected to stay above it permanently under current fiscal policies.

The 2036 projection is not presented as an unchangeable outcome. It is based on policies remaining in place. Changes to federal tax or spending policy could alter the path, but GAO said the current trajectory points toward a debt burden that continues to rise faster than the economy.

That distinction matters because the report describes a projection rather than a final result. Future legislation and administrative decisions could change federal revenues, spending and borrowing. GAO’s central warning is that postponing those decisions increases the difficulty of addressing the imbalance.

The choices facing Congress and the administration

GAO said reducing persistent annual deficits would require policy changes that increase revenues, decrease spending or combine both approaches. The agency did not prescribe a single legislative package in its warning. Instead, it called for a comprehensive long-term strategy from Congress and the administration.

Acting Comptroller General Orice W. Brown said federal policymakers should develop that strategy rather than continue delaying action. The recommendation places responsibility on both Congress and the administration, without assigning a specific policy combination for reaching a sustainable fiscal path.

Those choices could involve changes to taxes, federal programs or both, but the report’s stated alternatives are broad. The immediate issue identified by GAO is the growing difference between the pace of debt accumulation and the pace of economic growth.

Why the debt threshold matters

GAO said continued delay raises the risk of a fiscal crisis and could increase the cost of servicing federal debt. Higher servicing costs would place additional pressure on future federal budgets, potentially narrowing the room available for other federal priorities.

The report does not say that a fiscal crisis is inevitable. Its warning is that the risk increases as persistent deficits continue and as debt grows faster than the economy. The projected 120% level in 2036 illustrates the scale of the problem if current policies remain unchanged.

For households, the report does not announce an immediate change to taxes, federal benefits or government services. Its significance is the pressure it puts on policymakers to make decisions that could affect those areas over time. GAO’s recommendation is for a long-term national strategy before the fiscal position becomes more difficult and expensive to address.

What happens next

GAO’s report is a call for Congress and the administration to act; it does not establish a legislative deadline or identify a specific bill. The next step is therefore political: policymakers would have to decide whether and how to change revenue and spending policies.

Until those policies change, GAO’s projection remains that publicly held federal debt will continue growing faster than the economy and could reach 120% of the economy’s size in 2036. The agency’s message is that waiting does not remove the choices. It raises the fiscal risks associated with making them later.

Sources

• GAO Urges Immediate Action to Address America’s Unsustainable Fiscal Path, U.S. Government Accountability Office

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