The US budget deficit grew to almost US$2 trillion over the past year, government data showed Friday, reaching its highest level since 2021 despite President Donald Trump's promises to cut public spending and red ink. The deficit, which occurs when government spending exceeds its revenues, rose to US$1.99 trillion in fiscal year 2026, the Treasury Department said. This marked a 12-percent increase from the prior year, when the shortfall came in at US$1.78 trillion. A key driver of expenditures was the rising interest paid on public debt, which jumped US$144 billion, to a record US$1.36 trillion. Interest costs on around US$32 trillion in publicly held US debt have been ballooning in recent years, and climbing bond yields have fuelled further concerns. Meanwhile, an expected influx of revenue from Trump's sweeping tariffs failed to fully materialise during his second term. The Supreme Court struck down his global duties in February, triggering a wave of refunds. Treasury data released Friday reflected US$145 billion in customs refunds over the year — primarily due to tariffs — erasing significant gains from Trump's duties. Overall, government revenues climbed by three percent to US$5.40 trillion in the latest fiscal year, which ended September 30. But spending was much higher, rising by six percent to US$7.40 trillion. The Trump administration has pledged to slash deficits and government spending since he returned to the White House last year. Besides slashing the federal workforce and foreign aid, the Republican-controlled Congress pushed through cuts to the Medicaid health insurance scheme and moved to shrink the federal food assistance programme too. But they also extended expiring tax cuts and provided fresh funding for Trump's migrant deportation drive. The latest data released Friday showed that upticks in tax collection from individuals and customs revenues were offset by higher refunds and lower corporate tax collection. Among other sectors, spending on on defence military programmes increased by US$48 billion, or six percent, over the year to US$917 billion. Taken together, a Treasury official estimates the US deficit-to-GDP ratio is around 6.2 percent, up from 5.8 percent last year. This stands in contrast to Treasury Secretary Scott Bessent's previously stated goal of bringing the deficit down to three percent of GDP, alongside other targets like spurring economic growth of three percent. The latest budget figures come around two weeks before US midterm elections, where Trump's Republican Party is trying to retain control of Congress. Ahead of the crucial vote, both Republicans and Democrats have raised ideas that could widen the budget shortfall further. Trump recently promised US$5,000 to every American adult if Republicans maintained control of Congress, a plan that would cost over US$1 trillion. Democrats say they are looking to reverse Medicaid cuts and revive health care tax breaks. (AFP) Edited by Tony Sabine