Last week, the U.S. Treasury Department released its consolidated financial statements for fiscal year 2025. The numbers paint a picture that should have been front-page news in every paper in the country. Instead, they were met with near-total silence.
Here’s what the Treasury’s own accounting shows: the federal government holds $6.06 trillion in total assets against $47.78 trillion in total liabilities. That’s a negative net position of $41.72 trillion — a deterioration of nearly $2.07 trillion in a single year.
But that’s just the on-the-books number. It gets worse.
The federal government carries an additional $88.4 trillion in off-balance-sheet obligations — unfunded liabilities for Social Security and Medicare that don’t even appear on the official balance sheet. That number jumped by $10.1 trillion in just one year, driven primarily by projected shortfalls in Medicare Part B and Social Security.
Add it all up: $136.2 trillion in total federal obligations. That’s roughly five times the entire annual economic output of the United States.
The Government Accountability Office, for the 29th consecutive year, could not certify that the federal government’s financial statements were accurate. Twenty-nine years. Not a single clean audit in almost three decades, largely because the Department of Defense still can’t account for its own books.
What This Looks Like at the Kitchen Table
The authors of the Fortune commentary that broke through the media blackout — Steve Hanke of Johns Hopkins and David Walker, the former Comptroller General of the United States — offered a useful exercise. Drop eight zeros from every number and treat the federal government like a household.
That household earns $52,446 a year and spends $73,378 — running a $20,932 annual deficit. Its total debts and unfunded promises add up to $1,361,788. Its total assets come to $60,554.
That household is not struggling. It is not behind on payments. It is mathematically destroyed. No bank would extend it credit. No financial advisor would call it salvageable without a complete restructuring.
And that household is the entity that presumes to govern Texas.
What Washington Proposes
The Fortune commentary proposes two solutions: a bipartisan fiscal commission and an Article V Convention to propose a balanced budget amendment modeled on Switzerland’s debt brake.
These are serious proposals from serious people. Walker, in particular, spent years as the nation’s chief auditor sounding the alarm on federal fiscal mismanagement. His credibility on this subject is beyond question.
But Texans should be clear-eyed about what these proposals actually represent. A fiscal commission is a study group. An Article V Convention is a constitutional process that has never been successfully completed in the 237-year history of the republic. And a balanced budget amendment, even if ratified, would be enforced by the same Congress that created the problem in the first place.
These are reform proposals for a system that has demonstrated, over 29 consecutive years of failed audits and $136 trillion in accumulated obligations, that it is structurally incapable of reform.
The Question Texas Has to Answer
The federal government’s own accountants cannot certify its books. Its own projections show obligations growing faster than the economy. Its own Treasury Department publishes numbers that, translated into household terms, describe a family that is $1.3 million in debt on a $52,000 salary.
This is not a political argument. These are the federal government’s own numbers, published by its own agencies, and verified — or more precisely, unable to be verified — by its own auditors.
Every Texan who pays federal taxes is underwriting this insolvency. Every Texan who depends on Social Security or Medicare is counting on promises backed by a government that, by its own accounting, cannot keep them. Every Texas business that plans for the future is building on a fiscal foundation that the GAO has refused to certify for nearly three decades.
The question is not whether Washington will fix this. The question is whether Texas will still be along for the ride when the bill comes due.
The Treasury Department just told you the answer. The only question left is what Texas does about it.
