The Congressional Budget Office's June monthly budget review shows the FY2026 deficit through the first nine months totaled $1.373 trillion, up $35 billion from a year earlier as outlays rose $178 billion and receipts rose $142 billion. The larger shortfall pushes the annual deficit toward $2 trillion.
The increase in the deficit was driven largely by higher debt-service costs and spending on the government's three largest mandatory programs—Social Security, Medicare and Medicaid. Net interest on the national debt rose by $98 billion, a 13% gain, reflecting the growth in the debt size and higher long-term rates. Spending on Social Security rose by $62 billion (5%), Medicare by $58 billion (8%), and Medicaid by $49 billion (10%). Tax receipts increased, with individual income and payroll taxes together up $169 billion (5%), though income tax refunds rose $31 billion (10%) due in part to the One Big Beautiful Bill Act. Customs duties, including tariffs, were up $55 billion (51%), though tariff refunds beginning after a Supreme Court ruling reduced tariff revenue by about $70 billion in May and June. The federal debt itself remained a central factor, with the national debt exceeding $39 trillion.
“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, president of the nonpartisan Committee for a Responsible Federal Budget, said. “This is likely the tip of the iceberg; borrowing will soar if policymakers fail to get our entitlements under control, enact further unpaid-for tax cuts or spending increases, and otherwise ignore the need to cut spending and increase revenues.”
MacGuineas noted that Social Security and Medicare are within seven years of exhausting their trust funds, which would trigger across-the-board benefit cuts to both programs, and urged lawmakers to rein in deficits. The report called for targeting a sustainable deficit around 3% of GDP, creating a bipartisan commission to address fiscal challenges and entitlements, and being honest with the public about the risks of an unsustainable fiscal path.
None of this is normal, according to CRFB’s MacGuineas. The spending trajectory and rising interest costs suggest that debt-service burdens will remain a key factor in the federal budget unless reforms are enacted to control entitlements, reduce unpaid-for tax cuts, or otherwise raise revenues.
