U.S. Treasury Confirms Country Is Not Insolvent

Recent claims circulating on social media have sparked confusion regarding the financial status of the United States government, particularly the assertion that the U.S. Treasury has declared the government insolvent. This contention originated from an opinion piece published in Fortune by economists Steve Hanke from Johns Hopkins University and David Walker, a former U.S. comptroller general. Their article highlighted a Treasury report indicating that government liabilities surpass its assets, a situation that has persisted for several decades. However, it is crucial to clarify that such conditions do not equate to insolvency in the conventional sense.

The opinion piece garnered significant attention, its headline suggesting a catastrophic shift in the nation’s fiscal health. However, financial experts emphasize that the fundamental assertion of insolvency is misleading. According to Kent Smetters, faculty director of the Penn Wharton Budget Model, the U.S. Treasury has not officially labeled the country as insolvent. While it is true that the government’s fiscal policy requires reevaluation due to a continuing imbalance, the assertion that the government is insolvent does not reflect a sudden financial crisis.

The economists referenced the Treasury’s financial report for the fiscal year 2025, which documented total assets slightly exceeding trillion against liabilities that approached trillion. Despite this stark contrast, experts argue that characterizing the government as insolvent is inappropriate. Jessica Riedl of the Brookings Institution noted that a government possesses unique capabilities—most notably, the power to levy taxes—which fundamentally differentiates it from a private sector entity.

Indeed, the Treasury’s report supports the notion that due to its sovereign power, the government has expansive access to financial resources. This includes the ability to generate tax revenues and issue federal debt securities, ensuring its capability to meet current obligations and anticipated future needs.

While the national debt continues to grow, experts from various sectors agree on the importance of rebalancing the federal budget. Current predictions from the Congressional Budget Office indicate that impending deficits could reach staggering levels, underscoring the need for a comprehensive review of fiscal policies.

In conclusion, the U.S. Treasury has not made any declarations of insolvency. Instead, the core issue remains the necessity for a sustainable fiscal strategy that protects the long-term economic interests of the nation.

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