The U.S. Government’s Worsening Deficit

The U.S. government’s 2026 fiscal year will end on September 30. By the time it does, the federal government will have spent about $2.1 trillion more than what it collected in taxes and tariffs during the past year.

With a number like that, it’s not surprising the U.S. government’s total public debt outstanding has risen to more than $40 trillion. It has doubled in size during the last 10 years.

What may be surprising is that the U.S. government’s excessive spending in its 2026 fiscal year isn’t that much higher than it was in its 2025 fiscal year. The chart below shows the U.S. government’s cumulative spending and revenue by month for each fiscal year from 2023 through 2026. It shows that the rate of federal spending growth has been slowing down, with the slowest growth between 2025 and 2026.

It might even have shrunk in 2025 if not for two big factors. First, the U.S. government had to refund about $125.2 billion in tariffs after the Supreme Court ruled in February that the Trump administration lacked the legal authority to impose them.

The second factor is the increasing cost of paying interest on the now $40-plus trillion U.S. national debt. In August, Fox News reported:

Costs related to paying interest on the debt were up $117 billion, or 14%, in the first 10 months of fiscal year 2026 compared with the same period a year ago. The rise was attributed to higher long-term interest rates, as well as the larger national debt.

Combined, those two things increased the government’s spending by $242 billion above what might otherwise have been in the current fiscal year. The increase exceeds the $147 billion year-over-year increase in the U.S. government’s total cumulative spending through August between FY 2025 and FY 2026.

The chart also shows a rise in tax collections in recent years. Revenues continued increasing in FY 2026 and will total over $5.2 trillion by the end of September 2026. Despite rising tax collections, the government’s annual budget deficit remains large because spending continues to grow faster than tax revenues.

If it helps put the U.S. government’s excessive spending in perspective, over 98% of its revenue goes to interest on the national debt and entitlements. From this perspective, the government has to borrow trillions to cover the cost of all its discretionary spending.

In reality, politicians have the most control over discretionary spending. It is the rising cost of interest on the national debt and autopilot spending increases for entitlements that are behind the U.S. government’s excessive spending and worsening fiscal picture.