Followers of the International Monetary Fund (IMF) have long joked that the fund’s acronym stands for “It’s Mostly Fiscal.” For a long time it has helped bail out basket-case economies with severe fiscal deficiencies, such as Greece, Russia, and Argentina. But a recent report shows that the IMF is now targeting the United States because of its fiscal health.

The IMF report argues that government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac threaten the U.S. balance sheet and increase fiscal risk. Policymakers from both parties should heed this warning.

In 2008, the U.S. government placed both Fannie Mae and Freddie Mac into conservatorship after both entities were hit with massive losses stemming from the housing crisis. While the entities are still privately owned, this legal status allows the government to run them on behalf of their shareholders. As a result, according to the IMF report:

The crystallization of the federal government’s implicit guarantee [through conservatorship of] Fannie Mae and Freddie Mac in 2008 increased the federal deficit by US$291 billion (2 percent of GDP) and gave rise to cumulative commitments of around $100 billion over the following decade.

What is most alarming about this is that the government does not factor this implicit guarantee into its official accounting. This hides the true cost of this government backing from American taxpayers—the ones who end up footing the bill.

The IMF argues that these types of policies represent an undermining of government transparency in recent years—an opacity that can deceive financial markets as they try to measure the risk associated with U.S. government debt. What is even more frightening, however, are the ramifications of either Fannie or Freddie failing. This very scenario happened in 2010 in Dubai, where the GSE Dubai World nearly caused the collapse of its parent due to its off-the-books debt.

The Heritage Foundation has long argued for the elimination of Fannie Mae and Freddie Mac because of the distortions they cause in the housing market. Maybe it’s time to eliminate Fannie and Freddie for the distortions they cause to our debt as well.