Federal deficit rose to $2 trillion for fiscal 2026, adding to debt fears

The federal budget deficit rose to $2 trillion in fiscal 2026, the Congressional Budget Office estimated Thursday, as spending rose faster than revenues.The large deficit adds to concerns about the fiscal stability of the United States. This past fiscal year’s deficit was ​​$218 billion more than the deficit recorded in fiscal 2025, according to the CBO report.While tax revenue increased by about 3% from the year before, government spending outpaced it, rising an estimated $386 billion, or 6%. Spending increased for net interest on the debt, major benefit programs, defense, education, and more. The increase in spending over revenues is particularly noteworthy given Republicans and the Trump administration have called for spending cuts, including through the Department of Government Efficiency, which was active through much of the fiscal year. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement that this past fiscal year’s deficit “ranks among the highest deficits in our history.”“Instead of following the same broken pattern, policymakers should set a fiscal new year’s resolution to fix our unsustainable fiscal situation,” she said.The release comes at a time of concern for the fiscal stability of the government.The national debt recently hit $40 trillion, and yields on Treasury securities have risen steeply. Last month, the yield on the benchmark 10-year Treasury crossed 5%, which is the highest yield on that security since the summer of 2007, near the start of the financial crisis and the Great Recession.As of Thursday, the yield on the 10-year was clocking in at 5.299%, while the 20-year was up to 5.706%. The longer-run 30-year Treasury yield rose to 5.655%. The Treasury announced a buyback operation last month as an effort to calm markets.As the debt has risen, interest payments on debt have soared. Net interest payments on the debt are now the second-largest category of federal spending, clocking in at 15%, eclipsing even defense spending and Medicare. Only Social Security accounts for more federal spending.The Social Security retirement trust fund will be exhausted in 2032, earlier than previously anticipated, the program’s trustees projected in June, meaning that senior citizens would face a cut in their benefits at that time unless Congress acts.Workers can claim Social Security retirement beginning at age 62. Benefits increase the longer workers wait to claim them, but they cap out at a retirement age of 70.The trustees predicted that the Old-Age & Survivors Insurance trust fund would be enough to pay only 78% of scheduled benefits in the fourth quarter of 2032.The OASI trust fund, combined with the disability insurance trust fund, is projected to be able to pay benefits until 2034, after which there will be enough to pay out only 83% of benefits, the trustees project.President Donald Trump’s biggest legislative achievement is the One Big Beautiful Bill Act, which Republicans have since dubbed the working families tax cuts. The legislation, critics say, added to the deficit. Republicans and the Trump administration have argued that it will stimulate enough economic growth to generate new tax revenues.Corporate income tax revenue decreased notably, by 16%, in fiscal 2026, according to the nonpartisan scorekeeper, in part because the One Big Beautiful Bill Act allowed corporations to take bigger deductions for certain investments.FEDERAL RESERVE WON’T DISCLOSE IF TRUMP COLD-CALLS WARSHEarlier on Thursday, Republicans on the Joint Economic Committee released a monthly debt update that found that, relative to one year ago, the total gross national debt is $2.39 trillion higher, and relative to five years ago, it is $11.82 trillion higher.“Over the past year, the rate of increase averaged $6.55 billion per day, $273.11 million per hour, $4.55 million per minute, or $75,863.07 per second,” the JEC Republicans said in a news release. “The increase in gross national debt over the past year amounts to $6,977.35 per person or $17,700.59 per household.”