The United States records a budget deficit of USD 1.99 trillion due to increased spending

U.S. federal spending rose more than 5% to reach $7.4 trillion. (Reuters) The U.S. federal budget deficit widened to nearly $2 trillion in fiscal year 2026, serving as a fresh reminder of the magnitude of the government's borrowing needs and putting the country on track for a record debt burden in the coming years. For the fiscal year that ended in September, the deficit rose to $1.99 trillion, according to figures released Friday by the Treasury Department. That represents an increase of roughly 12% over the $1.78 trillion deficit recorded the previous year. Spending rose more than 5%, reaching $7.4 trillion, while revenue grew about 3%, to $5.4 trillion. Treasury Secretary Scott Bessent noted that tariff refunds were a key factor in the deficit's increase, even though he had previously highlighted a narrowing of the gap in 2025. Those payments were tied to a Supreme Court ruling in February that struck down most of the tariff increases imposed by President Donald Trump during his second term. The administration is currently working to create a new tariff barrier through other legislative measures. Treasury Secretary Scott Bessent projected a reduction of the debt through the boost from artificial intelligence. (REUTERS/Kylie Cooper/File Photo) This is the fourth consecutive year with a deficit close to $2 trillion. The figures indicate that the deficit amounts to roughly 6% of gross domestic product (GDP), an unusually high proportion in a context of relatively low unemployment. While the deficit appeared to shrink last year, this was due to an accounting adjustment: the 2025 Republican tax law tightened limits on student loans, and the Treasury recorded this change as a reduction in spending for that year. Although Bessent has claimed that the United States can achieve a rapid reduction of the debt curve —thanks in particular to faster and sustained economic growth, driven by the artificial intelligence boom that boosts American productivity— many economists, investors, and even other senior public officials are skeptical. International Monetary Fund (IMF) Managing Director Kristalina Georgieva noted on October 14 that "while growth helps, it does not allow the necessary adjustments to be made quickly enough." David Zervos, a recently appointed adviser to Bessent, disputed that assessment; in remarks to CNBC, he said the IMF has produced "messy" forecasts in the past. Georgieva's predecessor, the current president of the European Central Bank, Christine Lagarde, said that same day that the U.S. deficit "must be addressed by any country that finds itself, you know, in that particular category." Meanwhile, Phillip Swagel, director of the Congressional Budget Office (CBO), said on October 8 that it is not "plausible" that economic growth alone can stabilize U.S. debt levels. Donald Trump proposed expanding the defense budget and handing out $5,000 direct checks to citizens. (AP Photo/Mariam Zuhaib, File) In February, the CBO —a nonpartisan agency— warned that by 2030, U.S. debt relative to gross domestic product would surpass the record of 106% set in 1946, just after World War II. Last month, one measure of outstanding U.S. public debt surpassed the record figure of $40 trillion. Bessent has committed to presenting a fiscal consolidation plan, possibly during the congressional lame duck session, should Republicans lose control of the House of Representatives or the Senate. In the meantime, however, Trump keeps suggesting more spending. He has proposed an increase of nearly $500 billion in the defense budget and, in addition, has promised to deliver $5,000 checks to every American if Republicans keep control of both chambers of Congress in the midterm elections to be held next month. © 2026, Bloomberg