Federal deficit surged 12%. Tax collections grew, but spending did faster
After falling by 4% in the first full fiscal year of Donald Trump’s second term, the federal budget deficit surged 12% to an eyewatering $1.99 trillion in FY 2026. As Art Laffer, the creator of the eponymous Laffer Curve, insisted, the sweeping tax cuts of 2025’s One Big Beautiful Bill did not decrease federal revenue. In fact, total federal receipts rose by 3%, with individual income tax and payroll tax collections up 6%. The problem was, as it always has been, Uncle Sam’s spending.
