US Federal Deficit Reaches Nearly $2 Trillion Ahead of Midterm Elections

The US federal budget deficit rose to nearly $2 trillion in the last fiscal year, which ended on September 30. The Treasury Department announced the figure on Friday.

This was the largest annual deficit since 2021, when the federal government distributed aid to support the economy and Americans during the pandemic. The deficit was 12% higher than the $1.78 trillion recorded in the previous year.

“The deficit figures today culminate a remarkably somber year for our fiscal health. Fiscal discipline requires finding something that is both viable and forceful... Difficult decisions will be needed to achieve this and we are running out of time to make them.”

Net interest payments on public debt exceeded $1 trillion for the first time, driven by rising national debt and higher interest rates. The United States spent more on interest than any other category except Social Security and Medicare.

The deficit also increased because the Trump administration paid tariff refunds after the US Supreme Court ruled that certain global tariffs violated federal law. The Treasury Department estimates that around $145 billion in tariff refunds were paid during the last fiscal year.

Although the economy remains in relatively good condition, the country's fiscal health has worsened in recent years. Neither Republicans nor Democrats in Congress are willing to fully address the problem.

US debt reached a record $40 trillion in August, a concerning milestone with consequences for Americans, businesses, and the government. The "big and beautiful law" signed by President Donald Trump and congressional Republicans last year is expected to add trillions more to the national debt over the next decade due to generous tax cuts.