As the U.S. enters fiscal year 2026, U.S. Treasury borrowing shows no signs of slowing, with the Congressional Budget Office (CBO) reporting that the federal deficit increased by another $1 trillion in the first five months of the year.
The Congressional Budget Office’s (CBO) monthly budget review, released yesterday, updated through February 2026, shows the government borrowed an estimated $308 billion last month alone.
Of course, the more you borrow, the higher the interest cost on the debt. The Treasury Department will spend $31 billion more on net interest on the public debt between October 2025 (the start of fiscal year 2026) and February than the previous year. As a result, in just five months, the Treasury Department spent a total of $433 billion to pay down public debt, which now stands at nearly $38.9 trillion.
The Congressional Budget Office said interest payments increased “because debt is larger than it was in the first five months of fiscal 2025 and because long-term interest rates are higher.” It added: “The overall increase in interest payments is partially mitigated by a decline in short-term interest rates.”
Despite the eye-popping amounts, the deficit is actually an improvement on last year’s borrowing. During the same period (October 2024 to February 2025), the government will need to borrow $142 billion more than this year.
However, this improvement will do little to appease budget hawks and push the United States to improve its fiscal position. Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), said debt interest payments are expected to exceed $1 trillion this year and more than $2 trillion by 2036.
“This is unsustainable,” McGuinhas said. “Our fiscal problems are not going to solve themselves. We need policymakers to come together and agree to reduce the deficit – a 3% of GDP target would be a good start – and put our national debt on a sustainable path of decline as a share of the economy.”
Economists don’t necessarily worry about total debt (indeed, government debt is a necessary foundation for global markets). Instead, it is the debt-to-gross domestic product ratio, which measures a country’s borrowing in relation to its growth. If this situation is significantly imbalanced, growth could be hampered by the excess cash required to pay interest.
While the annual deficit-to-GDP target of 3% is different from the debt-to-GDP ratio, it still links government borrowing to economic output. In recent years, the deficit has been between 5% and 6% of GDP.
