Why “U.S. Insolvency” Wasn’t News

In the last month, a surprising amount of attention has focused on whether the U.S. government is insolvent.

The question first drew attention thanks to an op-ed article authored by economists Steve Hanke and David Walker in Fortune. The article might not have caused such a stir, except for its clickbait headline:

The Treasury just declared the U.S. insolvent. The media missed it.

Here’s the introductory paragraph of Hanke and Walker’s commentary:

The U.S. government is insolvent. That’s not hyperbole—it’s the conclusion drawn directly from the Treasury Department’s own consolidated financial statements for fiscal year 2025, released last week to near-total media silence. The numbers: $6.06 trillion in total assets against $47.78 trillion in total liabilities as of September 30, 2025.

You would think the media would be most upset at missing something like that. And in truth, they were, because various media organizations responded to the opinion piece through multiple fact checks.

Here’s how FactCheck.org’s Saranac Hale Spencer directly answered the question of whether it was true that the U.S. Treasury declared the U.S. government to be insolvent:

No. That’s the conclusion of an opinion piece that cited a Treasury report showing the government’s liabilities outweigh its assets. But that’s been the case for decades, and unlike an insolvent business, the government can levy taxes.

It’s a strange argument because of the backhanded way it acknowledges the reason why the news media didn’t cover the story: It isn’t news.

The U.S. Treasury Department has been publishing its consolidated financial statements annually since 1997. In every single one, the U.S. government’s projected liabilities over the next 75 years from when the reports were published have outweighed the projected value of its assets.

What has been true throughout these years, and also in 2026, is that the U.S. government doesn’t really face the risk of insolvency. To be insolvent, the U.S. government would have to have no way of paying its bills. If a business had a similar balance sheet, it would be headed to bankruptcy court. Unlike a business, the U.S. government has options.

It can raise taxes. It can inflate the nation’s currency. It can use tools of financial repression to artificially lower its borrowing costs, making it seem more affordable.

These are all things the U.S. government is already doing and has been for years. Especially after the government’s response to the 2020 coronavirus pandemic sent the national debt soaring.

The fact-check is also unique in identifying what all the experts Saranac Hale Spencer consulted with said is the real fiscal problem for the U.S. government, which agrees with Hanke and Walter’s main point. Here is that point of agreement, along with a summary by Kent Smetters, the faculty director of the Penn Wharton Budget Model:

All three of the experts we spoke to, though, agreed with the larger premise of the opinion piece, which is that the federal budget is unsustainably imbalanced.

The debt held by the public, which excludes money the federal government owes to itself, was $31.4 trillion as of April 3. The nonpartisan Congressional Budget Office estimates that the fiscal year 2026 deficit will be $1.9 trillion, and in 2036, the annual deficit will be $3.1 trillion.

“The real problem facing the government,” Smetters said, “is that we currently have a fiscal policy path that is itself imbalanced. Specifically, the present value of future spending far exceeds the present value of future tax revenue.”

Smetters offers solutions, but they’re the magical academic hand-waving kind that nobody would find to be either desirable or realistic, “To create balance, we would either need to raise all federal income taxes, including payroll taxes, immediately and forever by 30%, or cut all federal spending, including entitlement programs, immediately and forever by 25%, or some combination.”

A more practical solution would be to permanently restrain average government spending growth to a rate slower than the average rate of growth in government tax collections. The U.S. government’s current sorry fiscal state didn’t develop overnight. It is possible to achieve a balanced budget systematically over time with small changes in both spending and taxes.

It is really a matter of choosing how long we want it to take and then doing it. That second thing is the hard part.