The U.S. budget deficit is approaching $2 trillion, according to Treasury Department figures reported by The New Times, clouding the outlook for President Donald Trump's economy and his plans to cut costs.

The deficit climbed to $1.99 trillion in the fiscal year that ended Sept. 30, up from $1.78 trillion in 2025, "approaching its highest level since the pandemic, as spending on the military, safety net programs and interest on the debt dwarfed the Trump administration's cost cuts, Treasury Department figures showed on Friday," reported Times reporter Alan Rappeport.

The widening gap between what the government spends and what it collects in taxes and other revenue comes at a critical moment, as investors remain uneasy about the nation's surging debt load and stubborn inflation — forces that are driving up borrowing costs. Each annual shortfall is financed through borrowing that adds to that debt load. Rising Treasury bond yields pushed interest rates on mortgages, credit cards and auto loans to their highest levels in two decades earlier this month.

"Without real action on these vital fiscal issues, America is careening toward an ominous fiscal crisis that would leave all of us much worse off sooner than anyone in Washington apparently wants to believe," said Carolyn Bourdeaux, executive director of Concord Action, an advocacy group that promotes deficit reduction.

The last time the deficit topped $2 trillion was in 2021, when the pandemic prompted Congress to approve a huge stimulus package to help keep the economy afloat. Analysts point out, however, that no pandemic-style crisis is forcing the nation to take on that load this time — only a president's expansive spending policies.

"Instead, the shortfall stems from increased spending on the military, interest payments on the debt and Social Security benefits, coupled with falling corporate tax receipts as a result of the tax cut package," the Times reported.

That dynamic, Bourdeaux explained, means the United States is already accruing a dangerous, outsized amount of debt — one that will become a black hole when the next expensive crisis rolls along.

"The higher that interest rates move in the government bond market, the less likely it is that governments can finance these interest expenses in a sustainable way, so the stress begets more stress," said Daleep Singh, chief economist at Prudential Global Investment Management, in comments to the Times. "It crescendos in the absence of a credible fiscal plan, which is not forthcoming."

The Congressional Budget Office said last week that U.S. spending has been pushed higher by the growing cost of Social Security benefits, which are tied to rising inflation, and payments to military personnel. Higher long-term interest rates increased the cost of interest on the federal government's escalating debt by more than $ billion compared with 2025, while overall spending rose 6 percent to $7.4 trillion, the Times reported.

The ballooning annual deficit also threatens to reduce the fiscal ambitions of Treasury Secretary Scott Bessent to a distant dream. Bessent has said his goal was to bring the deficit as a share of the economy down to 3 percent, according to the Times. But after falling from 6.3 percent in 2024 to 5.9 percent in 2025, that measure rose above 6 percent again this year. Treasury's monthly budget statements and the CBO's regular updates will offer the next readings on that trajectory.