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US budget deficit at third highest level in history

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US budget deficit at third highest level in history
In fiscal year 2026, the US federal budget deficit reached nearly 2 trillion dollars, the third highest in the country's history. According to US Treasury Department data, only fiscal years 2020 and 2021 during the Covid pandemic saw higher deficits. With this, the country has remained in budget deficit for 25 consecutive years.

Compared with fiscal year 2025, the deficit increased by about 12 percent this time. In fiscal year 2026, the government's total revenue was 5.4 trillion dollars, 3 percent more than the previous year. Of this, 2.8 trillion dollars came from personal income tax and 1.8 trillion dollars from payroll tax.

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On the other hand, government spending increased by 6 percent to about 7.4 trillion dollars. Major spending areas included 1.7 trillion dollars for Social Security, 1.1 trillion dollars for Medicare, 1.1 trillion dollars for debt interest payments, 1 trillion dollars for the health sector, and 965 billion dollars for defense.

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The new budget deficit data emerged weeks after the country's national debt surpassed 40 trillion dollars. Due to high interest rates, spending on debt interest payments is rising. Currently, this interest payment is the third largest area of government spending.

According to budget analysts, rising deficits and debt without any major economic crisis pose a significant challenge to US fiscal policy. Maya MacGuineas of the Committee for a Responsible Federal Budget said realistic steps are urgent to protect US fiscal stability.

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She suggested setting a target to reduce the budget deficit to 3 percent of gross domestic product (GDP). According to her, this could help keep the debt-to-GDP ratio stable. However, achieving this target will require tough decisions.

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