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Financial Report of the United States Government

Executive Summary to the Fiscal Year 2023 Financial Report of U.S. Government

An Unsustainable Fiscal Path

An important purpose of this Financial Report is to help citizens understand current fiscal policy and the importance and magnitude of policy reforms necessary to make it sustainable. A sustainable fiscal policy is defined as one where the ratio of debt held by the public to GDP (the debt-to-GDP ratio) is stable or declining over the long term. GDP measures the size of the nation’s economy in terms of the total value of all final goods and services that are produced in a year. Considering financial results relative to GDP is a useful indicator of the economy’s capacity to sustain the government’s many programs. This Financial Report presents data, including debt, as a percent of GDP to help readers assess whether current fiscal policy is sustainable. The debt-to-GDP ratio was approximately 97 percent at the end of FY 2023, which is similar to (but slightly above) the debt-to-GDP ratio at the end of FY 2022. The long-term fiscal projections in this Financial Report are based on the same economic and demographic assumptions that underlie the SOSI.

The current fiscal path is unsustainable. To determine if current fiscal policy is sustainable, the projections based on the assumptions discussed in the Financial Report assume current policy will continue indefinitely.1 The projections are therefore neither forecasts nor predictions. Nevertheless, the projections demonstrate that policy changes need to be enacted for the actual financial outcomes to differ from those projected.

Receipts, Spending, and the Debt

Chart 5 shows historical and current policy projections for receipts, non-interest spending by major category, net interest, and total spending expressed as a percent of GDP.

  • The primary deficit is the difference between non-interest spending and receipts. The ratio of the primary deficit to GDP is useful for gauging long-term fiscal sustainability.
  • The primary deficit-to-GDP ratio increased during the financial crisis of 2008 and the COVID-19 pandemic. Spending was elevated in 2020 and 2021 due to funding to support economic recovery, but increased receipts reduced the primary deficit-to-GDP ratio to 10.8 percent in 2021 from 13.3 percent in 2020. The primary deficit-to-GDP ratio in 2023 was 3.8 percent, increasing by 0.2 percentage points from 3.6 percent in 2022 partially due to lower receipts.
  • The persistent long-term gap between projected receipts and total spending shown in Chart 5 occurs despite the projected effects of the PPACA2 on long-term deficits.
    • Enactment of the PPACA in 2010 and the MACRA (P.L. 114-10) in 2015 established cost controls for Medicare hospital and physician payments whose long-term effectiveness is still to be demonstrated fully.
    • There is uncertainty about the extent to which these projections can be achieved and whether the PPACA’s provisions intended to reduce Medicare cost growth will be overridden by new legislation.

Table 1 summarizes the status and projected trends of the government’s Social Security and Medicare Trust Funds.

Table 1: Trust Fund Status
Fund Projected Depletion Projected Post-Depletion Trend
Medicare Hospital Insurance * 2031 In 2031, trust fund income is projected to cover 89 percent of benefits, decreasing to 81 percent in 2047, then returning to 96 percent by 2097.
Combined Old-Age Survivors and Disability Insurance ** 2034 In 2034, trust fund income is projected to cover 80 percent of scheduled benefits, decreasing to 74 percent by 2097.
* Source: 2023 Medicare Trustees Report ** Source: 2023 OASDI Trustees Report
This Report's projections assume full Social Security and Medicare benefits are paid after fund depletion contrary to current law.

The primary deficit projections in Chart 5, along with those for interest rates and GDP, determine the debt-to-GDP ratio projections in Chart 6.

  • The debt-to-GDP ratio was approximately 97 percent at the end of FY 2023, and under current policy and based on this report’s assumptions is projected to reach 531 percent in 2098.
  • The debt-to-GDP ratio rises continuously in great part because primary deficits lead to higher levels of debt. The continuous rise of the debt-to-GDP ratio indicates that current fiscal policy is unsustainable.
  • These debt-to-GDP projections are lower than both the 2022 and 2021 Financial Report projections.

The Fiscal Gap and the Cost of Delaying Fiscal Policy Reform

  • The 75-year fiscal gap is a measure of how much primary deficits must be reduced over the next 75 years in order to make fiscal policy sustainable. That estimated fiscal gap for 2023 is 4.5 percent of GDP (compared to 4.9 percent for 2022).
  • This estimate implies that making fiscal policy sustainable over the next 75 years would require some combination of spending reductions and receipt increases that equals 4.5 percent of GDP on average over the next 75 years. The fiscal gap represents 23.8 percent of 75-year PV receipts and 19.8 percent of 75-year PV non-interest spending.
  • The timing of policy changes to make fiscal policy sustainable has important implications for the well-being of future generations as is shown in Table 2.

Table may scroll on smaller screens

Table 2
Costs of Delaying Fiscal Reform
Period of Delay Change in Average Primary Surplus
Reform in 2024 (No Delay) 4.5 percent of GDP between 2024 and 2098
Reform in 2034 (Ten-Year Delay) 5.3 percent of GDP between 2034 and 2098
Reform in 2044 (Twenty-Year Delay) 6.5 percent of GDP between 2044 and 2098
    • Table 2 shows that, if reform begins in 2034 or 2044, the estimated magnitude of primary surplus increases necessary to close the 75-year fiscal gap is 5.3 percent and 6.5 percent of GDP, respectively. The difference between the primary surplus increase necessary if reform begins in 2034 or 2044 and the increase necessary if reform begins in 2024, an additional 0.8 and 2.0 percentage points, respectively, is a measure of the additional burden policy delay would impose on future generations.
    • The longer policy action to close the fiscal gap is delayed, the larger the post-reform primary surpluses must be to achieve the target debt-to-GDP ratio at the end of the 75-year period. Future generations are harmed by a policy delay because the higher the primary surpluses are during their lifetimes, the greater is the difference between the taxes they pay and the programmatic spending from which they benefit.


  • Projections in the Financial Report indicate that the government’s debt-to-GDP ratio is projected to rise over the 75-year projection period and beyond if current policy is kept in place. The projections in this Financial Report show that current policy is not sustainable.
  • If changes in fiscal policy are not so abrupt as to slow economic growth and those policy changes are adopted earlier, then the required changes to revenue and/or spending will be smaller to return the government to a sustainable fiscal path.

Reporting on Climate Change

As stated in Executive Order 14008, Tackling the Climate Crisis at Home and Abroad “the United States and the world face a profound climate crisis…Domestic action must go hand in hand with United States international leadership, aimed at significantly enhancing global action.” In response, the administration has enacted key legislation and issued important policy actions. As summarized in the MD&A section of the Financial Report, many of the 24 CFO Act agencies have leveraged their FY 2023 financial statements to discuss a wide range of topics concerning how their agencies are responding to the climate crisis, including providing links to agency Climate Adaptation and Resilience Plans.


1 Current policy in the projections is based on current law, but includes extension of certain policies that expire under current law but are routinely extended or otherwise expected to continue. (Back to Content)

2 The PPACA refers to P.L. 111-148, as amended by P.L. 111-152. The PPACA expands health insurance coverage, provides health insurance subsidies for low-income individuals and families, includes many measures designed to reduce health care cost growth, and significantly reduces Medicare payment rate updates relative to the rates that would have occurred in the absence of the PPACA. (See Note 25 and the RSI section of the Financial Report, and the 2023 Medicare Trustees' Report for additional information). (Back to Content)

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Last modified 03/21/24