Big Money Show host Dagen McDowell discusses the deeply flawed memorandum on Iran, highlighting how unwilling Americans are to shoulder the additional fuel costs of regime change.
This year's federal budget deficit is now larger than last year's as federal spending grows faster than tax revenue, bringing the annual deficit closer to $2 trillion.
The non-partisan Congressional Budget Office (CBO) on Thursday released its monthly budget update for the month of June, which shows that the deficit for FY2026 was $1.373 trillion in the first nine months of the fiscal year.
That represents a $35 billion increase in the budget deficit compared to the same period last year. The large deficit was the result of a large increase in federal spending, which increased by $178 billion from the previous year while tax receipts increased by $142 billion.
The increase in spending was primarily due to the cost of servicing the federal government debt of more than $39 billion and increased spending on the federal government's three mandatory spending programs – Social Security, Medicare and Medicaid.
US NATIONAL DEBT BREAKS ECONOMY FOR FIRST TIME SINCE WORLD WAR.
The FY2026 federal budget deficit surpassed last year's deficit in CBO's June budget update. (Kevin Carter/Getty Images)
Total interest on the national debt was the largest category of spending increase in the first nine months of FY2026 and increased by $98 billion compared to the same period last year, an increase of 13%. This is due to the growth in the size of the national debt, and the high level of long-term interest rates – although some of the decline in short-term rates offset some of the overall increase.
Social Security was the next biggest driver of increased spending, with benefit payments up $62 billion, or 5%, from a year ago due to moderate benefits and a larger number of beneficiaries. CBO noted that the increase would have been larger but for payments that began in March 2025 under the Social Security Fairness Act.
Medicare spending increased by $58 billion from last year, an 8% increase, due to higher enrollment and higher payment rates for health services provided through the program. Medicaid spending increased by $49 billion, or 10%, which was largely due to higher enrollment costs.
FEDERAL BUDGET SUPPORT IS EXPECTED TO RECEIVE $2 TRILLION THIS FISCAL YEAR, RATED AMONG THE BIGGEST IN US HISTORY
The increased tax revenue was driven largely by higher individual tax receipts and payroll taxes, which combined rose to $169 billion, or 5%, despite a $31 billion, or 10%, increase in income tax refunds due to the One Big Beautiful Bill Act.
Tariff duties – the category that includes tariffs – were up $55 billion from last year. That equates to a 51% increase, which the CBO attributed to President Donald Trump's actions that raised tariffs on US trading partners.
However, tax refunds began to be paid out following a Supreme Court ruling in February that overturned some of the taxes, which reduced the income tax bill by nearly $70 billion in May and June.
Tax refunds are paid in May and June which reduces the subsidy the federal government receives from import taxes. (STR/AFP/Getty Images)
US NATIONAL DEBT CLEARS $39 TRILLION MILESION FOR FIRST IN COMBINED SPENDING
Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget (CRFB), noted in a statement that this year's deficit has now surpassed last year's deficit and “is likely to remain that way for the rest of the fiscal year.”
“We're likely to borrow $2 trillion or more this fiscal year — a staggering number if the economy continues to grow and unemployment is low,” he explained. “This may be a tipping point; borrowing will increase if policymakers fail to control our rights, stop any unfunded tax cuts or spending increases, and ignore the need to cut costs and increase revenue.”
MacGuineas noted that Social Security and Medicare are within seven years of the use of their trust funds, which could result in reduced benefits for both programs, and urged lawmakers to take steps to strengthen the federal budget deficit.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“None of this is normal. Policymakers should instead look at a more sustainable deficit of 3% of GDP, putting together a bipartisan commission to address our financial situation and rights, and perhaps most importantly, be honest with the public about the great risks we face by staying on this unpredictable path,” he added.
