Following the U.S. Department of the Treasury's publication of financial documents for the previous fiscal year on March 16, 2026, rumors abounded that it had declared the U.S. government insolvent — meaning the Treasury purportedly announced the government could no longer repay its debts.
An X user shared the rumor in a March 28, 2026, post (archived), adding that the government had allegedly spent $1.8 trillion more than it had collected in the year ending on Sept. 30, 2025.
Other users shared the claim in posts on Facebook, X and Threads. One post (archived) called the news "major" and lamented that no media outlet was reporting on the alleged development. Several Snopes readers also searched the website and emailed us, seeking to confirm whether the rumor was true.
The claim stemmed from an opinion piece in Fortune magazine on March 23, 2026. While the original Fortune article was tagged as "commentary" on the publication's website, the piece also appeared on Yahoo Finance. There, the only indication the piece was opinion, not fact, was at the very bottom of the article.
Its author, Steve Hanke, an economist at Johns Hopkins University, asserted that the Treasury had "declared the U.S. insolvent," citing figures from the Treasury's financial report and statements:
That's not hyperbole — it's the conclusion drawn directly from the Treasury Department's own consolidated financial statements for fiscal year 2025, released last week to near-total media silence. The numbers: $6.06 trillion in total assets against $47.78 trillion in total liabilities as of September 30, 2025.
Hanke then asked readers to imagine what the federal budget would look like at the scale of one household:
So consider this: divide every number by 100 million — drop eight zeros — and federal finances look like a household budget in freefall.
That household earns $52,446 and spends $73,378 — running a $20,932 annual deficit. Its total liabilities and unfunded promises amount to $1,361,788 against just $60,554 in assets, leaving it $1.3 million in the hole. Uncle Sam, by any accounting standard, is insolvent.
A review of the documents Hanke cited indicated that the assertion the Treasury declared the U.S. government insolvent may in fact have been hyperbole, perhaps explaining the media silence.
Although Snopes identified several instances where the Treasury and Congress' Government Accountability Office called the government's current fiscal trajectory "unsustainable," nothing we reviewed pointed to the U.S. government being unable to honor its debts as of this writing. As such, we rate the claim false.
Hanke's history of advocating for smaller government
Hanke has long advocated for shrinking the size of government. In the early 1980s, he served on the Council of Economic Advisers under then-President Ronald Reagan, where he pushed for the privatization of public lands. In a 2017 piece for Forbes, he reiterated those beliefs, calling public lands a "socialist anomaly" that are "mismanaged" — that is, despite being worth "trillions of dollars," according to Hanke, they don't generate money for the government. (It's worth noting that governments generate most of their money through taxes.)
Throughout the late 1980s and early 1990s, Hanke toured the world advising multiple countries going through financial crises, with mixed results. For instance, he advised Indonesian dictator Suharto to create a currency board that would peg the nosediving Indonesian rupiah to the U.S. dollar. Such policies can help stabilize a country's economy, at the cost of ceding certain monetary decisions to the foreign country whose currency it adopts, often with unintended consequences for smaller nations. Hanke's suggestions for Suharto led economist Paul Krugman to call him "a snake-oil salesman."
The fiscal state of the U.S.
It is true that the Treasury, other government agencies and the International Monetary Fund — a lender of last resort — have raised concerns about the United States' growing debt burden.
The Congressional Budget Office, in its 2026-36 budget and economic outlook, predicted that if nothing changed, the debt incurred by the U.S. government would reach 120% of the gross domestic product — the total of all goods and services produced by a nation. As of 2025, the CBO said, it represented 99.4% of GDP and would pass the 100% bar in 2026.
Meanwhile, the GAO repeatedly underscored the unsustainability of the U.S.' fiscal policy in its audit of the Treasury's 2024 and 2025 consolidated financial statements. By "unsustainable," the GAO means "a situation where federal debt held by the public grows faster than gross domestic product (GDP) over the long term."
"Under current policy and based on this report's assumptions, it [debt] is projected to reach 576 percent [of GDP] by 2100," the Treasury's financial report read. "The projected continuous rise of the debt-to-GDP ratio indicates that current policy is unsustainable."
According to the IMF, which calculates the debt-to-GDP ratio based on debt incurred by "general government" (which includes central, state and local governments), the U.S.' debt burden stood even higher, at 128% of GDP. While many developed countries' debts were above 100%, according to the IMF, few nations topped the U.S. rate. Among them were Italy, at 138.3%, and Greece, at 141.9%.
In sum, the U.S. government holds one of the highest levels of debt in the world. But the size of a country's debt does not by itself predict fiscal disaster. Economic growth, inflation, interest rates and investors' perception of a nation's solvency are important factors in a government's fiscal soundness.
The larger context
While comparing the government to a household — as Hanke did — may seem intuitive, it is an analogy many experts contest. Some even coined a term to describe it: "the household fallacy."
The idea is that like a household, a government should live within its means — i.e., not spend more money than it has. Several factors make this analogy imperfect. A household cannot impose taxes, for example. Meanwhile, spent carefully, government money can also spur economic growth, according to a July 2025 economic brief by the Federal Reserve Bank of Richmond. Lastly, the government controls the currency and has the ability to create money, which households cannot do.
Debt levels can become dangerously high if other conditions aren't met. Many countries have faced debt crises, including the U.S. As recently as 2020, Argentina restructured $65 billion of its debt. This was the ninth default in its history.
(Of note, President Donald Trump tapped Hanke to advise the U.S. on a plan to prop up Argentina's economy, according to an October 2025 Fortune article. Hanke has suggested Argentina either partially or fully adopt the U.S. dollar as its currency since 1991. The country did peg the Argentine peso one-to-one to the dollar in 1991, canceling the move in 2002 after a catastrophic recession. Since then, the peso has been on a so-called "crawling peg" — a system that allows a currency's value to fluctuate against another within a narrow band.)
But it takes more than the size of debt to lead a country to fiscal collapse. A high rate of inflation can play a role in how a country manages its debt. High inflation leads central banks to increase their base interest rates, which makes it more expensive for a country to borrow. This can be especially true if the interest rate is higher than the rate of economic growth.
Public perception also influences whether a large debt can lead to default. After a country issues new bonds, investors trade them on the secondary market. If a country has a reputation for being trustworthy, bonds become a refuge — that is, a safe investment, which typically attracts capital in troubled economic times. This has historically been the case for the U.S.
When the country auctions bills (debt that matures up to one year after its issue), notes (which mature between 2 and 10 years) or bonds (20-30 years), the interest rate is set according to demand: The higher the demand, the lower the interest rate.
If the economy is growing, the expectation of growth typically leads investors to sell bonds and invest in riskier assets, such as stocks. When a bond price drops on the secondary market, its effective interest rate — the yield — rises. When investors expect the economy to slow down or contract, U.S. bond prices often rise and yields fall.
U.S. yields act as a benchmark for borrowing costs across the economy. When they increase, interest rates on mortgages or corporate loans tend to follow suit as the markets expect growth and inflation. They also set the stage for the interest at which a country can borrow. High interest rates make it more difficult for borrowers to honor their debt obligations.
It is the combination of debt burden and cost of borrowing — influenced by economic growth, inflation, or borrower trustworthiness — that can lead a government to insolvency.
The current situation for the U.S.
The yield for the 10-year Treasury note hovered around 4.4% as of this writing, a sharp increase from its low of 3.96% on Feb. 27, 2026, the day before the U.S. and Israel attacked Iran. The move illustrated investors' concern about inflationary pressure as Iran blockaded the Strait of Hormuz, through which the U.S. government estimates 20% of the world's oil supply flows. The blockade sent the price of crude oil to above $100 a barrel, compared with $72.48 on Feb. 27.
Still, a St Louis Fed chart of the 10-year Treasury note yield since 1990 showed that it had remained around 4% since at least 2022, when the rapid economic recovery that followed the COVID-19 pandemic fueled inflation:
In 2023, the Fed set its effective federal funds rate between 5.25% and 5.50%, the highest it had been since 2007. After recovery-related inflation began to abate in 2024, the central bank sought to bring down the rate. The trend accelerated to help support the economy after the Trump's election in 2024, when the U.S. job market became increasingly sluggish. But Trump imposed sweeping tariffs, which created inflationary pressure, limiting the Fed's room to maneuver manoeuvre. Still, the effective federal funds rate stood at 3.50% to 3.75% as of this writing, the lowest it had been since October 2022.
In sum …
While the U.S.' debt burden was high at the time of this writing and many called the government to rebalance its finances, it was not, in fact, insolvent. Nor was it clear, as Hanke asserted, that "any accounting standard" revealed it to be so, as government finances do not follow the same rules as that of households or corporations.
For further reading, Snopes examined the claim that grocery prices in the U.S. hit a "record high" in 2025.