Even as federal revenues have grown, the federal government ran a $1.4 trillion deficit over the first nine months of fiscal year 2026 according to the Congressional Budget Office’s latest Monthly Budget Review, $35 billion higher than at the same point last year. Simply put, Washington continues to spend more than it brings in.

Federal receipts totaled $4.2 trillion in the first nine months of fiscal year 2026. This is an increase of 4% or $142 billion more than during the same period a year ago. The increase in receipts mainly came from a rise in collections of individual income and payroll taxes ($169 billion), as well as increased collections of customs duties due to changes in tariff rates ($55 billion). At the same time, corporate income tax collections declined by 24 percent, or $86 billion, largely due to the enactment of the One Big Beautiful Bill Act, which allowed corporations to claim larger investment deductions.

But higher revenues alone have not been enough to keep pace with federal spending. Outlays increased by 3 percent or $178 billion, from the same period a year ago. Outlays for the three largest mandatory spending programs, Social Security, Medicare, and Medicaid, rose by 7 percent, or $169 billion. This increase was largely driven by a growing number of beneficiaries, increased enrollment, and the rising costs per enrollee. Other areas with large increases include:

• Net Interest on the Public Debt: Outlays for net interest on the public debt rose by 13 percent, or $98 billion, compared to the first nine months of fiscal year 2025.
• Department of Veterans Affairs: Outlays increased by 9% or $26 billion.
• Small Business Administration: Outlays increased by $10 billion, largely because the agency recorded higher estimated costs for its outstanding disaster loans, bringing spending to nearly six times last year’s level.
• Department of Defense: Outlays for military activities increased by 5% or $30 billion.

In June alone, the Congressional Budget Office estimated that receipts totaled $495 billion, a decrease of 6 percent, or $32 billion, from June 2025. The decline in revenue was driven by a sharp drop in net customs duty collections after the Supreme Court’s February ruling resulted in roughly $50 billion in tariff refunds. Total spending in June 2026 reached $621 billion, an increase of $122 billion, or 24 percent, from June 2025, although part of that increase reflects differences in the timing of certain federal payments.

Interest on the national debt continues to be one of the fastest growing components of the federal budget. Money spent on interest payments provides no new services, strengthens no infrastructure, and improves no government programs. Instead, it pays for yesterday’s borrowing.

This month’s budget review is not a new story. Structural deficits continue to persist. Revenue growth, while welcome, continues to be outpaced by federal spending and rising borrowing costs. Taxpayers deserve a federal budget that is both transparent and fiscally sustainable.