Federal budget deficit hits $2 trillion in first 11 months of FY2026

Key Points:

• The federal government's budget deficit reached $2 trillion after 11 months of fiscal year 2026, with spending rising by $147 billion (2%) and tax receipts increasing by $154 billion compared to last year, according to the Congressional Budget Office (CBO).
• Mandatory spending programs such as Social Security, Medicare, and Medicaid drove much of the spending increase, with Social Security costs up $78 billion (5%), Medicare up $73 billion (8%), and Medicaid up $47 billion (8%).
• Interest expenses on the national debt grew by $111 billion (12%) due to a larger debt and higher long-term interest rates, while defense and veterans' benefits spending also saw notable increases.
• Tax revenue gains were partly offset by a $96 billion (25%) decline in corporate income taxes following 2025 tax reforms, with individual income and payroll taxes rising by 8% and 3%, respectively.
• Experts warn that the growing deficit and national debt, which recently hit $40 trillion, pose serious fiscal risks; calls have been made for lawmakers to adopt deficit reduction plans to avoid long-term economic damage.