US federal debt nears 98% of GDP, says US GAO

US GDP compared with debt, FY 2016–24. (Janes)

The US Government Accountability Office (GAO) released its annual report to Congress on the country's fiscal health on 5 February – it said that the “federal government is on an unsustainable fiscal path” and noted that spending on interest on public debt had surpassed spending on defence.

Difficult budgetary and policy decisions are needed to manage the national debt, including new spending and revenue policies “to address persistent deficits and reduce the nation's borrowing needs”, the report said.

As of the end of fiscal year (FY) 2024 on 30 September, debt held by the public was USD28.2 trillion, USD2 trillion higher than FY 2023 and nearly 98% of US GDP, according to the report. Another USD7.1 trillion in intragovernmental debt, usually Treasury securities held by federal government accounts, brings the total federal debt to USD35.3 trillion.

As of 31 December debt held by the public had increased to USD28.7 trillion, the report said.

The GAO attributes the increase in debt to “increasingly large annual budget deficits”, noting that despite strong economic growth in FY 2024, the deficit was more than USD1.8 trillion, the fifth consecutive year that the deficit exceeded USD1 trillion. From FY 2017 to FY 2024, the debt increased by a total of USD14 trillion, 50% of the figure at the end of FY 2024, the report added.

Deficits and interest

Federal programme spending in FY 2024 totalled nearly USD5.9 trillion, compared with revenue of USD4.9 trillion, resulting in a primary deficit of USD951 billion. The GAO noted that programme spending has exceeded revenue every fiscal year since 2008.