The Big Money Show co‑host Dagen McDowell analyzed a flawed memorandum concerning Iran, emphasizing that many Americans are reluctant to accept higher fuel prices in pursuit of regime change.
This year’s federal deficit is surpassing last year’s level, driven by spending that is increasing more rapidly than tax receipts, edging the shortfall toward $2 trillion.
The nonpartisan Congressional Budget Office (CBO) released its June budget review on Thursday, revealing that the FY2026 deficit reached $1.373 trillion after nine months of the fiscal year.
This represents a $35 billion increase compared with the same period last year. The larger deficit stems from federal spending that rose $178 billion, while tax receipts grew $142 billion.
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The FY2026 deficit exceeded last year’s shortfall in the CBO’s June update. (Kevin Carter/Getty Images)
Higher spending was largely driven by debt servicing costs on a national debt exceeding $39 trillion and rising outlays for the three major entitlement programs — Social Security, Medicare, and Medicaid.
Net interest on the debt was the largest component of the spending increase in the first nine months of FY2026, rising $98 billion (13%) from a year earlier. The rise reflects a larger debt stock and higher long‑term rates, partially offset by modest declines in short‑term rates.
Social Security was the next‑largest contributor to the spending rise, with benefit payments up $62 billion (5%) due to higher average benefits and a larger beneficiary base. The CBO said the increase would have been greater absent one‑time retroactive payments that began in March 2025 under the Social Security Fairness Act.
Medicare outlays rose $58 billion (8%), reflecting higher enrollment and increased payment rates for services delivered through the program.
Medicaid expenditures increased $49 billion (10%), driven primarily by higher per‑enrollee costs.
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Higher tax receipts — driven mainly by increased individual income and payroll taxes — rose $169 billion (5%). This occurred even as income‑tax refunds rose $31 billion (10%) following the enactment of the One Big Beautiful Bill Act.
Customs duties — including tariffs — increased $55 billion, a 51% rise, which the CBO linked to President Donald Trump’s tariff hikes on U.S. trading partners.
Tariff refunds were disbursed in May and June, reducing the Treasury’s receipts from import taxes. (STR/AFP/Getty Images)
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She warned that Social Security and Medicare are each projected to exhaust their trust funds in roughly seven years, a scenario that would trigger across‑the‑board benefit cuts, and urged legislators to act promptly to curb the deficit.
“None of this is normal,” she said. “Policymakers should aim for a far more sustainable deficit of about 3% of GDP, establish a bipartisan commission to tackle our fiscal challenges and entitlement pressures, and, most importantly, be transparent with the public about the severe risks of the current unsustainable trajectory,” she added.
