U.S. 2026 fiscal deficit approaches $2 trillion amid rising spending and debt

Huo Xing Finance reports that on October 17, according to The New York Times, U.S. Treasury data shows that the U.S. federal budget deficit for fiscal year 2026 rose to $1.99 trillion, up from $1.78 trillion in fiscal year 2025, reaching the highest level since the pandemic. Despite the Trump administration’s pledge to cut spending, military expenditures, Social Security outlays, and debt interest payments continue to rise, compounded by declining corporate tax revenues, further expanding the budget deficit. Data shows that total U.S. government spending for fiscal year 2026 increased by 6% year-over-year to $7.4 trillion, while tax revenues rose by 3% to $5.4 trillion. Rising long-term interest rates caused debt interest payments to increase by over $100 billion compared to 2025; additionally, the U.S. Supreme Court ruled that tariffs imposed by Trump under the pretext of national security were unlawful, requiring the government to refund over $100 billion in tariff revenues this year. The total U.S. national debt surpassed $40 trillion in August. As inflationary pressures persist and Treasury yields reach their highest levels in two decades, government financing costs continue to rise. Previously, U.S. Treasury Secretary Bessent aimed to reduce the deficit-to-GDP ratio to 3%, but this ratio has again risen above 6% in fiscal year 2026. IMF Managing Director Georgieva stated that while economic growth provides some assistance, it is not sufficient to achieve the necessary fiscal adjustments quickly enough.