Treasury & Markets Anticipate At Least $2 Trillion FY 2026 Deficit

The U.S. Treasury Department released its Quarterly Refunding Documents for Q2 of Calendar Year 2026 today. These documents include information from Treasury and bond market participants about their estimates of needed borrowing over the next two quarters. The presentation from Treasury shows that the Administration is estimating a $2.1 trillion deficit (based on the President’s budget) for the Fiscal Year (FY) 2026 while market participants are estimating a $2.0 trillion deficit.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

Both the Treasury and the markets agree we’re on course to borrow $2 trillion this year, up from the $1.8 trillion deficit we logged last year. $2 trillion deficits used to be unheard of, and then they only occurred during major recessions – it’s beyond scary that $2 trillion deficits are now the norm.

As policymakers and thought leaders are increasingly gravitating toward the idea that we need to put deficits on track towards 3% of GDP, today’s news shows just how far we have to go. A $2 trillion deficit is more than 6% of GDP – about twice the 3% target – and things are getting worse, not better.

This is yet another data point – along with debt passing 100% of the economy in March and interest spending on track to top more than $1 trillion this year – showing the need for us to get our fiscal situation under control.  

Markets will only tolerate our unsustainable borrowing for so long; the risk of a fiscal crisis gets higher as the days pass. We need deficit reduction urgently. 

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For more information, please contact Matt Klucher, Assistant Director for Media Relations, at klucher@crfb.org.