US New Debt Rises to Five-Year High Under Trump

TVS News AI, editorially supervised, presents US New Debt Rises to Five-Year High Under Trump.

The new debt of the US has climbed to the highest level since 2021 – despite the spending cuts announced by President Donald Trump. In fiscal year 2026, which ended at the close of September, the deficit totaled $1.99 trillion, twelve percent more than the prior year ($1.78 trillion), as the US Treasury Department reported on Friday in Washington.

What this means for you: When the world's largest economy widens the gap between its revenues and expenditures this rapidly, the fallout ripples across the entire capital market – from US Treasury bonds to the dollar's exchange rate to the interest you earn on your savings account or pay on your portfolio.

Two line items driving the budget higher

The chasm between revenues and expenditures is clearly measurable: federal government spending rose by six percent to $7.4 trillion, while revenues grew by just three percent to $5.4 trillion. Rising debt-service costs weighed especially heavily on the budget: interest payments climbed by $144 billion to a record $1.36 trillion. On top of that came refunds of $145 billion in tariffs – after the Supreme Court ruled most of Trump's tariffs invalid in February.

The math is as bitter as it is unmistakable: instead of filling the coffers, the tariff policy has saddled the budget with an extra burden – $145 billion in refunds alone are heading Washington's way.

Trump's promises, Bessent's target – and the reality

Donald Trump had returned to the White House pledging to slash government spending and, with it, new borrowing. Treasury Secretary Scott Bessent had set a goal of reducing the deficit to three percent of economic output. According to the Treasury Department, the deficit now stands at an estimated 6.2 percent – more than double the announced target. SPIEGEL frames this development against the backdrop of runaway borrowing as "Trump's debt binge."

The outlook is grim as well: economist Nancy Vanden Houten of Oxford Economics expects a similarly steep deficit in the next fiscal year. Should the war with Iran drag deep into the new fiscal year, the budget hole could swell even further, she warned.

The debt mountain grows – past $40 trillion

The deficit is pushing the US national debt sharply higher. According to the Treasury Department, it crossed the $40 trillion mark (roughly €34.4 trillion) for the first time in August – a pile roughly one-third larger than the current deficit alone. SPIEGEL also points in this context to the sell-off in the bond markets, where, by market observers' assessment, the mood "smells almost of panic."