Federal deficit hits nearly $2 trillion as interest costs top $1 trillion
The federal budget deficit grew to nearly $2 trillion in the fiscal year that ended Sept. 30, the Congressional Budget Office said Thursday. That is $218 billion more than the year before. Interest on the national debt topped $1 trillion for the first time, and tariff refunds added to the gap.
The federal government spent far more than it took in again this year, and the gap is growing.
The deficit for the fiscal year that ended Sept. 30 was $1.993 trillion, the Congressional Budget Office estimated Thursday, The Wall Street Journal reported. That is 12% higher than last year and the largest since 2021. The government spent $7.4 trillion, up 6%. It collected $5.4 trillion in revenue, up 3%.
The deficit grew by $218 billion from the year before, both CNN and the Washington Examiner reported.
Interest is a big reason. Net interest on the debt topped $1 trillion for the first time, CNN reported. It rose 11% as the debt grew and interest rates climbed. The country now spends more on interest than on anything except Social Security, including defense and Medicare.
Tariffs also played a role. The Trump administration had to issue refunds after the Supreme Court struck down some of its global tariffs. CBO estimates about $130 billion in refunds went out last year, CNN reported.
Corporate tax revenue fell 16%. The CBO said that was partly because last year's Republican tax law let companies take bigger deductions for some investments. Spending on Social Security, Medicare and Medicaid kept rising as the population ages and health costs grow.
The national debt recently passed $40 trillion. Investor jitters have sent rates on U.S. debt soaring, CNN reported. The yield on the 10-year Treasury note was about 5.3% on Thursday, the Washington Examiner reported.
"Clearly, we can't keep going like we have," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. She urged lawmakers to commit to no new borrowing and to form a bipartisan fiscal commission.
The two parties see the tax law differently. Republicans and the Trump administration say it will spur enough growth to bring in new revenue. Critics say it adds to the deficit.
What we know: The deficit is near $2 trillion, and interest costs are now larger than defense spending.
What we don't: Whether Congress will act on the debt before next year's budget fights.
Where outlets agree CNN and the Washington Examiner both report that the deficit grew by $218 billion from the year before.
Where they differ The Washington Examiner reports that Republicans and the Trump administration say their tax law will spur enough growth to bring in new revenue, while CNN reports the law is expected to add trillions to the debt over a decade.