Now that the midterm elections are over and we are entering a lame-duck session, Congress has an opportunity to get to work on restoring federal fiscal sanity and sustainability. In late August, the U.S. passed $40 trillion in total federal debt, a milestone that rightly generated serious attention. While this milestone drew headlines, nominal dollar numbers are the wrong metric to focus on in connection with fiscal matters. This $40 trillion number is only the tip of the financial iceberg that threatens to sink the United States.
Based on the latest Social Security and Medicare Trustees Reports and the financial results for fiscal 2026, we estimate that total federal liabilities and unfunded social insurance obligations were at least $147 trillion as of Sept. 30, 2026. That is an increase of about $11 trillion in one year, and up from about $20 trillion in 2000. The primary reasons for the increases are the annual deficits, the growth in unfunded Social Security and Medicare obligations, and increased unfunded liabilities in federal civilian and military pensions and retiree health care.
To better convey our past, present, and future financial condition, fiscal numbers need to be put in context. The easiest way to do that is to relate all data to the size of the economy (GDP). In short, how big is the slice of the pie? For example, $40 trillion in total federal debt represents about 124% of GDP, up from 56% in 2000, and $147 trillion in total federal liabilities represents about 452% of GDP, up from 199% in 2000. Looking ahead, the Congressional Budget Office’s (CBO) most recent projection estimated that total federal debt as a percentage of GDP will rise from 124% to 190% in the next 30 years. That must not happen.
By looking at the interest burden linked to America’s current debt level, one can clearly grasp the problem associated with excessive government debt. In fiscal 2025, 36.5% of individual income taxes collected were used just to service the national debt. So, over a third of Americans’ tax dollars were siphoned away to service debt taken on in the past to finance government spending in years gone by. If that’s not bad enough, the CBO projects that by 2036 an estimated 50.6% of individual income tax dollars will be devoted solely to servicing the government’s debt. That would mean that over half of Americans’ tax dollars would not be used for the provision of government goods, services, and other payments.
If Uncle Sam does not change course, America’s unsustainable fiscal mess will result in adverse economic, national security, foreign relations, and domestic tranquility consequences. Something has to change. But what can be done?
Fiscal responsibility needs to be a priority in the lame-duck session, when the outgoing Congress meets after the election and before the new Congress takes office in January. Specifically, the current Congress should pass the bipartisan Fiscal Commission Act (H.R. 3289) before it adjourns. Doing so would help till the ground with the public and set the table in Congress for tough spending, revenue, and other choices in the future. Passing this bill would also be a great legacy accomplishment for Speaker Johnson, Chairman Arrington, lead Republican co-sponsor Huizenga, and others. But the Fiscal Commission Act remains in limbo.
There are two possible avenues for the bill to be removed from limbo. One would be to add this bill to a new continuing resolution, if necessary. The other would be to add it to an increase in the debt ceiling, if applicable. Who said nothing significant can be accomplished in a lame-duck session?
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