Full Breakdown
FY2026 Deficit Approaches $2 Trillion as Interest and Entitlement Costs Surge
7/11/2026, 12:19:21 PM
Core Event
The Congressional Budget Office (CBO) reported that the FY 2026 federal budget deficit reached $1.373 trillion through the first nine months, a $35 billion increase from the same period a year earlier. At the current pace, the shortfall is projected to near $2 trillion for the fiscal year, marking one of the largest deficits in U.S. history.
Rising Debt and Interest Costs
National debt surpassed $39 trillion, the first time it has exceeded the size of the economy since World War II. Net interest on the debt rose $98 billion year-over-year, a 13 % jump, bringing total interest outlays to $857 billion for FY 2026—about $23.8 billion each week. Those interest payments now exceed the combined spending of the Departments of Defense, Commerce, Homeland Security, Education, the EPA, the SBA, and the U.S. Coronavirus Refundable Credits scheme.
Official Statements & Responses
The CBO attributed part of the deficit increase to President Donald Trump’s executive actions that raised tariffs on U.S. trading partners, though a February Supreme Court ruling later reduced tariff revenues by roughly $70 billion. Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget (CRFB), warned that the deficit “is likely to stay that way for the rest of the fiscal year” and urged lawmakers to curb entitlement growth and consider a bipartisan commission to address the fiscal trajectory.
Criticism & Opposition
MacGuineas called the current path “unsustainable,” recommending a target deficit of 3 % of GDP—about half the present level—and stressing the need for honest public communication about the “grave dangers” of continued borrowing. She highlighted that Social Security and Medicare trust funds could be exhausted within seven years, which would force across-the-board benefit cuts if reforms are not enacted.
Verbatim Quotes
- “373 trillion through the first nine months of the fiscal year.” — CBO report
- “We will likely borrow $2 trillion or more this fiscal year – an astounding figure given that the economy keeps growing and unemployment is low,” — Maya MacGuineas, CRFB president
