What GAO Found
GAO found (1) the Bureau of the Fiscal Service’s Schedules of Federal Debt for fiscal years 2026 and 2025 are fairly presented in all material respects and (2) Fiscal Service maintained, in all material respects, effective internal control over financial reporting relevant to the Schedule of Federal Debt as of September 30, 2026. GAO’s tests of selected provisions of applicable laws, regulations, contracts, and grant agreements related to the Schedule of Federal Debt disclosed no instances of reportable noncompliance for fiscal year 2026.
Over the past 10 years, from fiscal year 2016 through fiscal year 2026, total federal debt managed by Fiscal Service has increased by about 105 percent from $19.6 trillion to $40.2 trillion.
Total Federal Debt Outstanding, September 30, 2016, through September 30, 2026
Note: A small amount of total federal debt is not subject to the debt limit.
During fiscal year 2026, total federal debt increased by about $2.5 trillion, with about $2.1 trillion of the increase in debt held by the public (i.e., investors outside the federal government). Debt held by the public is increasing mainly because the federal government continues to spend more than it collects in revenue, resulting in annual budget deficits that must be financed through borrowing. The budget deficit for fiscal year 2026 was about $2.0 trillion, compared to about $1.8 trillion for fiscal year 2025. Additionally, interest expense on debt held by the public has increased significantly, nearly tripling over the last 5 fiscal years, from about $392 billion in fiscal year 2021 to about $1.1 trillion in fiscal year 2026, due to growing debt and higher interest rates.
On October 1, 2026, debt subject to the debt limit surpassed $40 trillion and continues to approach the current $41.1 trillion limit. Once the limit is reached, Treasury will need to implement extraordinary measures to prevent the U.S. government from defaulting on its obligations until Congress acts to increase or otherwise modify the debt limit.
The federal government’s fiscal outlook is unsustainable, which poses serious economic, national security, and societal challenges. The Congressional Budget Office projects that fiscal policy under current law will result in average annual budget deficits of more than $2.4 trillion over the next 10 years. To finance these deficits, the federal government will need to continue to borrow from the public.
Why GAO Did This Study
GAO audits the consolidated financial statements of the U.S. government. Because of the significance of the federal debt to the government-wide financial statements, GAO audits Fiscal Service’s Schedules of Federal Debt annually to determine whether, in all material respects, (1) the schedules are fairly presented and (2) Fiscal Service management maintained effective internal control over financial reporting relevant to the Schedule of Federal Debt. Further, GAO tests compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements related to the Schedule of Federal Debt.
Federal debt managed by Fiscal Service consists of debt held by the public and intragovernmental debt holdings. Debt held by the public primarily represents the amount the federal government has borrowed to finance cumulative cash deficits. Intragovernmental debt holdings represent federal debt issued by the Department of the Treasury to other federal government accounts that typically have an obligation to invest their excess annual receipts (and interest earnings) over disbursements in federal securities.
Source: GAO Reports & Testimonies · 2026-11-09