No.
One of the more eye-catching claims doing the rounds this week comes from a Fortune article arguing that the U.S. government is “insolvent”.
The evidence? The Treasury’s own financial statements for 2025 show roughly $6 trillion in assets against nearly $48 trillion in liabilities. Add in long-term “unfunded” obligations for Social Security and Medicare and the number balloons to well over $100 trillion.
On the face of it, that sounds catastrophic. A negative net worth of $40 trillion would bankrupt any company on earth.
There is just one problem.
The U.S. government is not a company. The confusion between the accounts of a company accounts and a country accounts is a massive problem, sometimes journalists don’t understand the accounting, sometimes they ignore the difference to generate click bait headlines.
A Category Error
The word “insolvent” has a specific meaning. It applies to entities that must meet their obligations from a fixed pool of assets and income. If they cannot, they fail.
Governments do not work like that.
They:
- tax
- borrow
- and, in extremis, issue currency
There is no liquidation event for the United States. No administrator turns up, sells off Yellowstone, and distributes the proceeds to creditors.
So calling the U.S. “insolvent” in a corporate sense is not just dramatic. It’s a category error.
What Actually Matters on the Balance Sheet
That doesn’t mean the numbers are meaningless. It just means we need to read them properly.
Not all liabilities are equal.
The roughly $30 trillion in federal debt is real, tradable, and must be serviced. Rising interest costs are already becoming a serious fiscal constraint. 16% of all US Government spending goes on servicing debt interest, and under Trump debt is rising. The Big Beautiful Bill adds $4trn to Government debt just to fund tax cuts.
Pension obligations and veteran benefits are also real, though long-dated and, in practice, politically adjustable.
Then there is the headline-grabbing number: tens of trillions in “unfunded” social insurance obligations.
This is where things start to get slippery.
The $88 Trillion Problem (That Isn’t a Bill)
The oft-cited $80–90 trillion figure for Social Security and Medicare is not a debt in any conventional sense.
It is a projection. Specifically, a 75-year estimate of the gap between expected revenues and expected spending under current policy.
That estimate depends on assumptions about:
- economic growth
- demographics
- healthcare costs
- political choices that have not yet been made
Change any of those, and the number moves—sometimes dramatically.
It is better understood as a warning signal than a balance sheet liability. A way of saying: if nothing changes, this won’t add up.
The Real Problem: Interest and Demographics
Strip away the more theatrical claims, and the underlying issue is actually quite simple.
The U.S. faces a long-term fiscal imbalance driven by two forces.
First, interest costs. With debt levels high, even modest increases in rates translate into large increases in annual spending. That crowds out everything else.
For decades the Dollar was the global reserve currency. This meant that the US could run up lots of debt cheaply, and successive Presidents did exactly that. The Republicans might talk tough on budget deficits and threaten shutdowns, but historically they are the worst for piling up debt.
But fewer countries are holding the dollar in their reserves any more. Some of this is geopolitics, but a lot of it is the unpredictable behaviour of the current President. He introduces tariffs, discovers they are illegal, introduces new tariffs, launches a war against Iran, Iran predictably closes the straits of Hormuz, Trump asks the same countries he just insulted and slapped tariffs on for help. It’s a huge mess.
But demographics are also against America. An ageing population means fewer workers supporting more retirees. That puts sustained pressure on Social Security and, more significantly, Medicare. Republicans want to cut the costs of social security and Medicare, but it is their voters who are the most dependent on them, and their states with the most to lose if cuts bite. Traditionally the US has resolved this problem by allowing younger workers into the US as immigrants who worked and paid the taxes that supported generations of old people. Trump has ended this flow into the Labour market, and this as economic consequences. Very bad one.
These are not abstract accounting problems. They are structural ones.
The GAO Disclaimer: Messy, Not Mysterious
It is also true that the Government Accountability Office has refused to give a clean audit opinion on federal accounts for nearly three decades.
That sounds alarming, and it is not ideal.
But it largely reflects persistent issues in specific areas, particularly Department of Defense accounting and interagency reconciliation. It does not mean the U.S. government is flying blind.
It means parts of its financial plumbing are still surprisingly creaky.
What This Really Is
The Fortune framing works by combining three things:
- a large negative accounting position
- a long-term projection of future shortfalls
- and a loaded term like “insolvency”
Put together, they create a sense of immediate crisis.
Taken separately, they describe something only slightly less scary; the US government has a long-term fiscal problem that has not yet been addressed, and which is getting worse due to policy decisions by the current administration.
The Uncomfortable Truth
The United States is not insolvent.
Government’s don’t go bankrupt but they do default on the external debts. Normally these are developing countries, but America is edging closer to becoming the biggest economy to default. Trump has a track record of not paying his debts with his companies, and this, plus his unpredictable behaviour and a growing debt mountain with no plans to reduce it will make it harder and more expensive to service US debt. Which in turn brings default closer. As Trump, and the US, get flakier, countries will regard America as less reliable, and will hold less of their reserves in dollars. This pushes up the interest rates that America pays on it’s debt mountain.
The US is on a fiscal path that will, over time, higher taxes, lower spending, or much faster growth. None of those options are politically easy. Which is why the problem persists.
And why, every so often, someone reaches for a more dramatic word.
Conclusion
There is a difference between a system that is broken and one that is under strain.
The U.S. government is firmly in the second category.
That should concern us.
But calling it “insolvent” tells us less about the problem than it does about the appetite for dramatic headlines.
https://fortune.com/2026/03/23/us-government-insolvent-fiscal-crisis-fix/
https://hbr.org/1996/01/a-country-is-not-a-company