US Budget Deficit Approaches $2 Trillion, Highest Since 2021

The United States budget deficit has grown to almost $2 trillion in the past year, according to government data released on Friday. This is the highest level since 2021, despite President Donald Trump’s promises to reduce public spending.

The deficit, which happens when the government spends more money than it collects, rose to $1.99 trillion in fiscal year 2026. This is a 12% increase from the previous year, when the deficit was $1.78 trillion. A major factor in this increase is the rising interest payments on public debt, which surged by $144 billion to a record $1.36 trillion.

The US debt now stands at about $40.3 trillion, and rising inflation is making borrowing more expensive. The Supreme Court recently overturned Trump’s tariffs, leading to a wave of refunds that have contributed to the budget gap. Refunds related to tariffs amounted to $145 billion over the past year, offsetting expected revenue from these tariffs.

Overall, government revenues increased by 3% to $5.40 trillion, but spending rose even more, by 6% to $7.40 trillion. Defense spending alone increased by $48 billion, reaching $917 billion.

Experts predict that the deficit will remain high in the coming year, especially if conflicts, such as the ongoing tensions with Iran, continue. Nancy Vanden Houten from Oxford Economics warned that the budget gap could widen further.

As the midterm elections approach, both major political parties are proposing ideas that could increase the deficit. Trump has promised $5,000 to every American adult if Republicans keep control of Congress, a plan that would cost over $1 trillion. Meanwhile, Democrats are considering reversing cuts to Medicaid and restoring health care tax breaks.