The U.S. budget picture for 2026 is bleak. The federal government has already borrowed almost $2 trillion so far this fiscal year, and it’s on track to borrow even more before the year is over, adding to a ballooning deficit.
The Congressional Budget Office estimates that the federal budget deficit was $1.8 trillion just for the first 10 months of the government’s fiscal year, which ends Sept. 30.
“[In just July,] the country borrowed $432 billion,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “That’s $14 billion a day.”
This year’s red ink is partially due to less money coming in, thanks to tax cuts in last year’s big tax and spending bill.
“We had an extra strong tax refund season, and we’ve seen a big drop in corporate taxes because of the law,” said Nancy Vanden Houten, lead economist at Oxford Economics.
On the other hand, the government is spending more. Among the biggest drivers of the deficit are Medicare and Social Security.
Another driver is interest on the national debt. Add it all up, and the debt is about to hit $40 trillion, according to Jessica Riedl, tax and budget fellow at the Brookings Institution.
“The debt is bigger than the economy right now,” Riedl said. “Which has never happened in American history, outside of World War II.”
Riedl said there are no easy solutions. Some of the options include hiking Social Security payroll taxes for high earners, raising the retirement age, and trimming benefits for high-income seniors.
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