The US budget deficit reaches $1.99 trillion, the widest in five years

The federal government closed fiscal 2026 with a budget deficit of $1.99 trillion, the largest in five years, according to Treasury Department figures released on Friday^1,2. The Well News reported the figure as $1.992 trillion, $217 billion more than the year before⁷. Devdiscourse also put the year-on-year increase at $217 billion⁸. The fiscal year ended on September 30, and the Honolulu Star-Advertiser noted that it was the first full budget year of the current administration¹¹.

IndexBox described the shortfall as the third-largest on record and said it was driven by record outlays¹². Firstpost and France 24 both reported it as the highest annual gap since 2021^9,10. The Treasury release was the subject of a CNBC report on the same day².

What drove it

Reuters reported that defense spending for the year rose by 6% to $917 billion¹. Devdiscourse attributed the widening in part to tariff refunds and to record spending⁸. The New York Times reported that higher interest rates are inflating borrowing costs while the administration spends on the Iran war and on tariff refunds³. Barron’s reported that the One Big Beautiful Bill Act helped drive the deficit higher, and that corporate refunds rose 79% against the prior fiscal year⁴.

A narrower Congressional Budget Office measure of interest costs rose $115 billion to $1.14 trillion, an increase that on Newsmax’s account made up more than half of the growth in the deficit⁶. Firstpost reported that debt interest costs reached a record⁹. The Honolulu Star-Advertiser also pointed to defense spending as a factor in the increase¹¹.

What to watch

France 24 noted that the result stands in contrast to Treasury Secretary Scott Bessent’s previously stated goal of bringing the deficit down to three percent of GDP¹⁰. MarketWatch wrote that Washington is not doing much about the gap, and pointed to the repeated raising of the country’s borrowing limit, arguing that markets are the only thing that could force Congress to treat the debt ceiling seriously⁵.

For holders of government paper the number sets the quantity of debt that has to be absorbed in the year ahead. Two of the components are mechanical rather than discretionary on the reporting above: the interest bill, which the CBO measure shows rising by $115 billion⁶, and corporate refunds, which Barron’s reported up 79%⁴. The third, defense, rose to $917 billion¹. None of the outlets in this pack reported a change of policy in response to the figures, and MarketWatch’s account was that the political response so far has been limited⁵.