National debt interest and entitlement spending push FY2026 federal budget deficit toward $2 trillion

The nonpartisan Congressional Budget Office (CBO) on Thursday released its monthly budget review for the month of June, which showed the FY2026 deficit was $1.373 trillion through the first nine months of the fiscal year. That represents a $35 billion increase in the budget deficit compared with the same period a year ago. The larger deficit was the result of a larger increase in federal spending, which is up $178 billion from a year ago while tax receipts have risen $142 billion. Increased spending was primarily driven by the cost of servicing the federal government's more than $39 trillion national debt as well as rising expenses for the government's three largest mandatory spending programs – Social Security, Medicare and Medicaid. Net interest on the national debt was the largest category of increased spending in the first nine months of FY2026 and rose $98 billion compared with the same period a year ago, an increase of 13%. This was caused by the growth in the size of the national debt, as well as higher long-term interest rates – though some declines in short-term rates mitigated some of the total increase. Social Security was the next largest driver of the increased spending, with benefit payments up $62 billion, or 5%, from a year ago due to higher avera...