As the United States’ gross national debt recently surged past the $38 trillion mark, commentators hastened to ring alarm bells. And surely the figure is eye-popping. But as someone who was elected to the U.S. Congress in 1984 on the very platform of fiscal responsibility—and who was the first practicing CPA ever elected to Congress—I want to sound a more fundamental warning: the number may be much less meaningful than meets the eye. We will never truly know what the national debt really is, or tackle it effectively, unless we adopt full-GAAP accounting at the federal level.
An old warning grows more urgent
When I ran for Congress, it was nearly a long-shot race. No one expected the first practicing CPA to win, but I did—and I did so on the idea that the national books of the U.S. government were not being kept in a transparent, modern accounting framework. I argued then—just as I argue now—that unless we apply Generally Accepted Accounting Principles (GAAP), we are flying blind.
That same conviction led me to author the Chief Financial Officers (CFO) Act of 1990, which President George H. W. Bush signed into law. The Act was meant to bring professional accounting, auditing, and financial reporting standards—based on GAAP—into every major federal agency. Unfortunately, more than three decades later, its full promise has yet to be realized. Much like our incomplete debt accounting, the CFO Act itself remains only partially implemented, and until it is fully carried out, Congress and the public still lack a reliable picture of our government’s true fiscal condition.
Today, with the $38 trillion+ figure being splashed across headlines, my long-before-made argument—and the very purpose of the CFO Act—become even more valid.
What the headlines get right—and what they miss
The Treasury is reporting that federal debt outstanding has passed $38 trillion. That is a factual, albeit headline-worthy stimulus to public concern. But what gets far less attention is the underlying accounting architecture.
The current federal “debt” figure is almost entirely a cash/modified cash-basis number. It doesn’t fully reflect many longer-term liabilities (pensions, retiree health benefits, unfunded mandates) in the same way that a GAAP-prepared corporation or a sound provincial or state government would present.
There is virtually no requirement at the federal level for the government to produce a comprehensive accrual-based balance sheet that shows all assets, all liabilities, and the resulting net position (equity).
Without that, every “$38 trillion” number is more of an approximation—a rolling sum of borrowed securities plus intragovernmental holdings—than a meaningful “what we owe net of what we own” statement.
And this accounting deficiency imposes two major dangers:
- Illusion of precision: The public and policymakers behave as though the $38 trillion is a precise, well-measured figure, when in fact large portions of federal obligations are off-balance or hidden in footnotes or trust funds that lack the same transparency.
- Inadequate policy response: If you don’t know what truly you owe (and what you own), how can you craft a credible strategy to pay it down or manage it? Without full GAAP reporting, you risk tackling only the visible tip of the iceberg while ignoring the unseen bulk.
GAAP: The missing link in federal fiscal housekeeping
When I stood in Congress as a CPA, one of my first priorities was to push for stronger bookkeeping and financial reporting of the federal government. Think about what GAAP would require: A full balance sheet, listing all assets and all liabilities—including pensions, retiree benefits, contingent liabilities, environmental obligations, etc.; An income (or change in net position) statement, showing revenues, expenses (including non-cash), and how net position changes year to year; Transparent disclosures and footnotes so that any user can see assumptions, commitments, risks, and deferred items; Comparative years, reconciliations, and audit opinions (ideally by an independent auditor).
Under GAAP, the U.S. government would no longer simply say “we borrowed $X” and “our debt outstanding is $Y.” We would know “we hold assets worth A, liabilities of L, net position (equity) of E, and here’s the trend.” We would know where the real pressure points lie.
Why the risk is now magnified
With the debt ballooning past $38 trillion and climbing faster than ever, the cost of ignorance grows. The more we delay adopting proper accounting, the greater the risk that hidden liabilities explode, interest costs soar, and the real solvency picture is obscured. Some elements to highlight:
Interest on the debt is already consuming ever-more of federal budget space. If you don’t know the full scope of what you owe, you can’t credibly model how rising rates or slower growth will affect sustainability.
Demographic and program pressures (Social Security, Medicare, veterans’ benefits) will drive longer-term liabilities. Without full accrual accounting, those remain partly hidden.
Policy decisions (tax cuts, spending commitments, new entitlement expansions) are made on the basis of incomplete pictures. If you don’t know the real base, you cannot assess new incremental risk properly.
The path forward—what should happen
Here’s what I believe must be done—based on the CPA discipline that first took me into Congress:
- Mandate full accrual GAAP accounting by the federal government — not just operating results, but a full balance sheet, net position disclosures, and audited financial statements.
- Fully implement the CFO Act of 1990 — ensure every agency and department prepares and publishes GAAP-based audited financial statements, with consistent standards and accountability for compliance.
- Transparent fiduciary-style reports for major trust funds — show the full actuarial liabilities for retiree benefits, pensions, health plans, etc.
- Integrate macro policy with financial reporting — require that major legislation (tax cuts, program expansions) reference the impact on net position and full accounting—not just budget-year appropriation.
- Educate and engage the public about the true “net debt” number — the public should not be seduced by gross debt headlines alone; they should see net assets vs. net liabilities, trend lines, risk exposures.
Why it matters—and why it’s urgent
As I have long argued, dealing with national debt isn’t simply a matter of “let’s cut spending or raise taxes.” It is fundamentally about being honest with ourselves as a country about our financial condition. When a business fails to adopt GAAP, investors lose confidence; when governments ignore accrual accounting, hidden risks can build until they snap.
Now that the debt has breached $38 trillion, the urgency is higher than ever. This moment is not just another round of alarming numbers—it is a warning signal that we are operating without full transparency, without a full balance sheet, without the discipline that any credible organization uses.
Final word
When I ran for Congress, many said my position was academic—but the truth was, I was applying the CPA discipline to public finance. I said that our greatest long-term threat wasn’t foreign—it was fiscal. The fact that we are now facing unprecedented federal debts makes that approach not just relevant—it is indispensable.
Until the U.S. government commits to full GAAP accounting and fully implements the CFO Act that I authored, the “national debt” will remain a headline—dangerously approximate, partially hidden—and our ability to legitimately tackle it will be constrained. The people deserve better. The future demands clarity.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
