US government spends nearly R33 trillion more than it collects in revenue

The US government experienced a budget deficit of nearly $2 trillion (R32.9 trillion) in fiscal year 2026, its highest level since 2021. Government spending outpaced revenue, despite President Donald Trump's promises to curb public expenditure. The gap widened due to rising interest costs on the $32 trillion in US debt, driven by climbing bond yields.

Treasury bond yields surged, heightening concerns about borrowing costs for US voters heading into the November midterm elections. Refunds from President Trump's tariffs, which were overturned by the Supreme Court, failed to fully compensate for the shortfall, with $145 billion in customs refunds recorded in 2026. Overall, government revenues grew by 3% to $5.40 trillion, but spending rose by 6% to $7.40 trillion.

The deficit is expected to remain similar in the upcoming fiscal year, according to Nancy Vanden Houten of Oxford Economics. The Trump administration has vowed to reduce deficits and government spending, but the budget gap may widen if the Iran conflict persists. The Republican-controlled Congress enacted cuts to Medicaid, foreign aid, and food assistance programs, while also extending tax cuts and funding deportations.

The deficit-to-GDP ratio rose to 6.2%, surpassing the Treasury Secretary's goal of 3%. Ahead of the midterms, both parties have proposed measures that could further expand the budget deficit.