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US Budget Deficit Climbs to Nearly $2 Trillion in 2026 as Debt Interest Costs Hit Record
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Firstpost•17-10-2026, 00:27
US Budget Deficit Climbs to Nearly $2 Trillion in 2026 as Debt Interest Costs Hit Record
- •The US budget deficit rose to $1.99 trillion in fiscal year 2026, marking a 12 percent increase from the previous year.
- •A primary driver of expenditures was the rising interest paid on public debt, which surged by $144 billion to a record $1.36 trillion.
- •Government revenues climbed three percent to $5.40 trillion, while spending increased six percent to $7.40 trillion.
- •An expected revenue influx from sweeping tariffs failed to materialize after the Supreme Court struck down global duties, resulting in $145 billion in customs refunds.
- •Defense spending increased by six percent to $917 billion, contributing to an estimated deficit-to-GDP ratio of around 6.2 percent.
Key Questions Answered
The US budget deficit grew to $1.99 trillion in fiscal year 2026 due to surging interest costs on public debt, which hit a record $1.36 trillion, alongside higher spending on defense and lower-than-expected tariff revenues after the Supreme Court struck down global duties.
The Supreme Court struck down global tariffs in February, triggering a wave of refunds that resulted in $145 billion in customs refunds over the year and erased significant gains from Trump's duties.
A Treasury official estimates that the US deficit-to-GDP ratio is around 6.2 percent for fiscal year 2026, which is an increase from 5.8 percent the previous year and above Treasury Secretary Scott Bessent's target of three percent.
