The U.S. Treasury reported Wednesday that the July budget deficit surged to
$432.3bn, the largest monthly shortfall since March 2021 and a record for July.
For the first 10 months of FY26 the cumulative deficit is nearly $1.8tn,
exceeding the same period in FY25. July Medicare outlays rose to $174.0bn from
$103.0bn in June, taking year-to-date Medicare spending to $955.0bn. July’s
largest single outlay exceeded Social Security payments of $141.0bn and net
interest on the federal debt of $104.0bn. Tariff refunds reduced the budget by
about $33.0bn, and a calendar effect—July 1 fell on a non-workday—trimmed
receipts by roughly $99.0bn. The Treasury flagged rising Medicare costs and
persistent interest expenses as key drivers of the fiscal deterioration.
President Trump has urged the Fed to cut rates to lower borrowing costs and has
eased public criticism of the Fed since his nominee took over as chair in May.
