An important purpose of this Financial Report is to help citizens understand current fiscal policy and the importance and magnitude of policy reforms necessary to make it sustainable. A sustainable fiscal policy is defined as one where the ratio of debt held by the public to GDP (the debt-to-GDP ratio) is stable or declining over the long term. GDP measures the size of the nation’s economy in terms of the total value of all final goods and services that are produced in a year. Considering financial results relative to GDP is a useful indicator of the economy’s capacity to sustain the government’s many programs. This Financial Report presents data, including debt, as a percent of GDP to help readers assess whether current fiscal policy is sustainable. The debt-to-GDP ratio was approximately 97 percent at the end of FY 2023, which is similar to (but slightly above) the debt-to-GDP ratio at the end of FY 2022. The long-term fiscal projections in this Financial Report are based on the same economic and demographic assumptions that underlie the SOSI.
The current fiscal path is unsustainable. To determine if current fiscal policy is sustainable, the projections based on the assumptions discussed in the Financial Report assume current policy will continue indefinitely. 1 The projections are therefore neither forecasts nor predictions. Nevertheless, the projections demonstrate that policy changes need to be enacted for the actual financial outcomes to differ from those projected.
Chart 5 shows historical and current policy projections for receipts, non-interest spending by major category, net interest, and total spending expressed as a percent of GDP.
Table 1 summarizes the status and projected trends of the government’s Social Security and Medicare Trust Funds.
| Table 1: Trust Fund Status | ||
|---|---|---|
| Fund | Projected Depletion | Projected Post-Depletion Trend |
| Medicare Hospital Insurance * | 2031 | In 2031, trust fund income is projected to cover 89 percent of benefits, decreasing to 81 percent in 2047, then returning to 96 percent by 2097. |
| Combined Old-Age Survivors and Disability Insurance ** | 2034 | In 2034, trust fund income is projected to cover 80 percent of scheduled benefits, decreasing to 74 percent by 2097. |
| * Source: 2023 Medicare Trustees Report ** Source: 2023 OASDI Trustees Report This Report's projections assume full Social Security and Medicare benefits are paid after fund depletion contrary to current law. | ||
The primary deficit projections in Chart 5, along with those for interest rates and GDP, determine the debt-to-GDP ratio projections in Chart 6.
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| Table 2 | |
|---|---|
| Costs of Delaying Fiscal Reform | |
| Period of Delay | Change in Average Primary Surplus |
| Reform in 2024 (No Delay) | 4.5 percent of GDP between 2024 and 2098 |
| Reform in 2034 (Ten-Year Delay) | 5.3 percent of GDP between 2034 and 2098 |
| Reform in 2044 (Twenty-Year Delay) | 6.5 percent of GDP between 2044 and 2098 |
As stated in Executive Order 14008, Tackling the Climate Crisis at Home and Abroad “the United States and the world face a profound climate crisis…Domestic action must go hand in hand with United States international leadership, aimed at significantly enhancing global action.” In response, the administration has enacted key legislation and issued important policy actions. As summarized in the MD&A section of the Financial Report, many of the 24 CFO Act agencies have leveraged their FY 2023 financial statements to discuss a wide range of topics concerning how their agencies are responding to the climate crisis, including providing links to agency Climate Adaptation and Resilience Plans.
1 Current policy in the projections is based on current law, but includes extension of certain policies that expire under current law but are routinely extended or otherwise expected to continue. (Back to Content)
2 The PPACA refers to P.L. 111-148, as amended by P.L. 111-152. The PPACA expands health insurance coverage, provides health insurance subsidies for low-income individuals and families, includes many measures designed to reduce health care cost growth, and significantly reduces Medicare payment rate updates relative to the rates that would have occurred in the absence of the PPACA. (See Note 25 and the RSI section of the Financial Report, and the 2023 Medicare Trustees' Report for additional information). (Back to Content)
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Certain material weaknesses, limitations, and uncertainties prevented the Government Accountability Office from expressing an opinion on the U.S. Government's consolidated financial statements included in the Financial Report and, therefore, GAO disclaimed an opinion on such statements. Certain information included on or referenced in this website, such as individual agency financial reports that were audited by other auditors, is separate from and not specifically reported in the Financial Report and therefore not covered by GAO's disclaimer.
Last modified 03/21/24
Financial Report of the United States Government
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