Washington — President Trump’s first full year back in the White House ended with a $2 trillion budget deficit, the largest peacetime shortfall since the COVID‑19 pandemic. The Treasury reported $5.4 trillion in revenue, up about 3% from the prior year, while total outlays reached $7.4 trillion, a 6% increase over fiscal 2025.
Revenue Gains and Spending Priorities
The administration points to the revenue increase as a sign that the tax‑cut‑and‑spending agenda is not eroding the tax base. Income from individual and corporate taxes grew despite the broader tax reductions enacted early in the term. At the same time, the government’s biggest entitlement programs—Social Security, Medicare and Medicaid—expanded faster than revenue, reflecting demographic pressures and rising health‑care costs.
Veterans’ services also saw higher spending as both the number of veterans needing care and the cost per beneficiary rose. By contrast, military spending rose only 6%, roughly in line with the overall government average, even as the United States entered a conflict with Iran.
Interest Costs and Debt Burden
Interest payments on the public debt now exceed $1.1 trillion annually and are climbing quickly, consuming a larger share of the federal budget. The total debt held by the public stands at $32.5 trillion, with overall government obligations—including intra‑governmental IOUs—reaching $40.3 trillion.
Critics Call for Fiscal Discipline
Michael Peterson, CEO of the Peterson Foundation, warned that the $2 trillion deficit is “contributing to higher inflation, record interest costs and rising interest rates throughout the country.” He urged voters to demand answers from Congress in upcoming elections.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, described the deficit as “astonishing” and the largest outside of war or recession. She advocated halving the deficit—currently about 6% of GDP—to stabilize the debt, urging leaders to avoid new borrowing and to find “twice as many savings for every new must‑have cost incurred.”
Tariff Refunds and Customs Revenue
A notable headwind for the administration was the Supreme Court’s February decision striking down the first broad tariff package, forcing the government to refund $137 billion in customs duties. Nevertheless, the Treasury still collected a net $173 billion in customs duties, down from $195 billion the year before, after the second round of tariffs was implemented.
Looking Ahead
While the deficit figure is stark, the administration emphasizes that revenue growth and restrained military spending demonstrate fiscal responsibility amid global challenges. The coming fiscal year will test whether the current trajectory can be adjusted to reduce borrowing while maintaining essential services for seniors, veterans, and the nation’s defense.
Original reporting: WMAL (Washington DC) — read the source article.
