The U.S. Treasury Department announced that the federal budget deficit for the first 11 months of FY 2026 reached $1.97 trillion, exceeding the total deficit of $1.775 trillion for FY 2025.

After calendar adjustments, this figure is approximately 5% lower than the same period last year. The deficit for August alone was $166.8 billion, nominally down 52% year-on-year; however, due to payments for Medicare and Social Security being moved up to July because August 1 fell on a Saturday, the adjusted August deficit is about $248 billion, which is $7 billion higher than the same month last year. Unadjusted spending in August was $527 billion, down 24%; interest payments decreased by $14 billion for the month, attributed to changes in inflation accounting, but year-to-date interest payments have still increased by $143 billion, or 13%. August revenue was $360 billion, up 5%, including net tariffs of about $12.84 billion, with tariff refunds for the month around $10.54 billion, about one-third of the $33.38 billion in refunds from July. The Congressional Budget Office estimates the deficit is close to $2.0 trillion. September often sees surpluses due to corporate tax deadlines. The total national debt is approximately $40 trillion.

Interest has become a structural expense: year-to-date increases have outpaced monthly declines. Tariffs generate revenue while also resulting in refunds, leading to unstable net contributions. The calendar shift of Social Security payments from August to July can change the monthly headline but does not alter the fact that the total for the eleven months has already surpassed last year's total.

From a market mechanism perspective, this is a supply of national debt. The buyers are the bond market that must absorb fiscal refinancing; the sellers are the Treasury Department. Beneficiaries are short-term cash and interest-bearing notes; those under pressure are housing and risk investments sensitive to long-term interest rates. Funds flow into the treasury from taxes and tariffs and then return to bondholders in the form of interest, with the deficit filled by new debt.

Supplementary structure: The CBO states that both spending and revenue have increased, with interest up about 12% year-on-year. The narrative that public debt held exceeds the size of the economy has been repeatedly reported during this period.

Source: Public Information