Controller’s Desk: The new fiscal year is one month old, and Washington has already borrowed $409 billion. That is the Congressional Budget Office’s estimate of the federal deficit for October 2026, released Monday, Nov. 9. It works out to about $13 billion of new borrowing for every day of the month.
A single month never tells the whole story. Still, the first month of fiscal 2027 sets the tone for the budget fights coming in December. So it is worth reading the way a controller reads a monthly close: start with the totals, strip out the noise, then ask what is driving the line items.
The October Federal Deficit by the Numbers
CBO estimates the government took in about $369 billion in October and spent about $778 billion. Revenue came in $36 billion below October 2025. Spending ran $89 billion above it. Put those together and the gap widened by $125 billion from last year.
Here is the comparison against Treasury’s own Monthly Treasury Statement:
- October 2026 (CBO estimate): $369 billion in, $778 billion out, $409 billion deficit.
- October 2025 (Treasury actual): $404 billion in, $689 billion out, $284 billion deficit.
- October 2024 (Treasury actual): $327 billion in, $584 billion out, $257 billion deficit.
In other words, the government spent about $2.11 for every dollar it collected last month. A year ago the ratio was about $1.70. No household or business could run that way for long. Yet that is the starting point for the new year.
The longer view is just as sobering. Treasury’s online monthly data go back to October 2015. In that span, the worst October was $284 billion, a level reached in both 2020 and 2025. Last month beat that by roughly $125 billion. Even the October that followed the pandemic shutdowns came in lower.
The rolling total tells the same story. The Committee for a Responsible Federal Budget adds up the last 12 months of CBO figures and gets $2.1 trillion in borrowing from November 2025 through October 2026. By the group’s estimate, that equals about 6.5% of the economy. For comparison, the full fiscal 2026 deficit ran 6.2% of GDP, so the trend is still moving the wrong way.
Strip Out the Calendar, and the Federal Deficit Still Grew
Timing matters in monthly budget data, and CBO flagged it. When the first of a month falls on a weekend, Treasury sends out benefit and other payments early. Nov. 1 fell on a weekend in both 2025 and 2026. As a result, payments that belong in November landed in October both years.
Because the shift happened in both years, it does not explain much of the jump. CBO said that after adjusting for weekends and holidays, the October deficit still would have been $95 billion larger than a year earlier. That adjusted number is the one to focus on. It means roughly three-quarters of the increase reflects the real underlying trend, not the calendar.
Revenue Pressures Behind the Federal Deficit
Total collections fell, even though paycheck withholding grew steadily through fiscal 2026. Two policy choices explain much of the weakness, and both carried over from fiscal 2026.
Tariff refunds are still eating customs receipts
The bigger swing is in customs duties. In February, the Supreme Court ruled that the administration could not impose tariffs under the International Emergency Economic Powers Act. Customs and Border Protection began paying refunds in May. Treasury’s data show what followed. Net customs receipts hit about $31 billion in October 2025. Then they collapsed to roughly zero in May 2026 and turned negative in June, at minus $26 billion. By September they had recovered only to about $6 billion.
According to CBO, the government paid about $130 billion of roughly $166 billion in eligible refunds during fiscal 2026. That leaves a remainder still in the pipeline. Treasury has not yet published October’s line items. However, if October customs receipts looked anything like September’s, the tariff swing alone would account for most of the $36 billion revenue drop. That is an estimate, and Treasury’s October statement will confirm or correct it.
Business write-offs are front-loaded
Corporate income taxes are the other soft spot. Treasury’s year-end numbers show corporate receipts fell from $452 billion in fiscal 2025 to $381 billion in fiscal 2026. CBO tied most of that 16% drop to the 2025 reconciliation law, which lets companies deduct more of their investment spending right away.
Conservatives should be honest about that cost. Full expensing is good policy because it rewards building plants and buying equipment in America. But it shifts tax payments into later years, so the near-term federal deficit takes the hit first.
Why Spending Drives the Federal Deficit
Revenue is not the main problem, though. In fiscal 2026, Treasury collected a record $5.4 trillion, up $169 billion from the year before. Over the same stretch, spending rose to nearly $7.4 trillion. That is an increase of about $386 billion, more than twice the revenue gain. The final fiscal 2026 deficit came to $1.99 trillion on Treasury’s books, up from $1.78 trillion.
Look at what grew, using Treasury’s year-end figures. (For the full map of the budget, see our breakdown of where your tax dollars go.)
- Social Security: $1.667 trillion, up from $1.581 trillion.
- Medicare: $1.073 trillion, up from $997 billion.
- Net interest: $1.052 trillion, up from $970 billion.
- National defense: $965 billion, up from $917 billion.
- Veterans’ benefits: $416 billion, up from $377 billion.
Most of that list runs on autopilot. Social Security and Medicare grow with enrollment and benefit formulas, not with annual votes. Interest grows with the debt itself. Congress only votes each year on the discretionary slice, which includes defense. So every year without reform locks in another bigger starting line.
That is why October’s spending jump should not surprise anyone. A controller would call it a run-rate problem, not a one-time charge. Outlays were $89 billion higher than a year ago, and that figure includes the early November payments. The underlying engine is the same one that drove all of fiscal 2026.
The Federal Deficit Debate
Democrats will point to the revenue side. They will argue that the 2025 tax law and the tariff fight drained receipts. They have a point on timing. Corporate collections and customs duties both fell, and the refunds are real money going out the door.
Republicans will answer that revenue is at a record high and that spending is the variable out of line. On the numbers, that argument is stronger. Even with the corporate dip and the tariff refunds, total receipts grew in fiscal 2026. Meanwhile, outlays grew faster in nearly every major program.
There is also a lesson for the right. Building budget plans around tariff revenue was always risky, because tariffs depend on trade volumes, courts and negotiations. The IEEPA refunds proved that. Durable federal deficit reduction has to come from the spending side, where the long-term pressure actually sits.
Budget watchdogs on both sides are already sounding alarms. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said: “We are just one month into the new fiscal year, and astonishingly we have already borrowed $409 billion.” Her group also warned that Social Security is “approaching insolvency in less than six years.”
What a Bigger Federal Deficit Costs Families
The federal deficit can feel abstract until it shows up in a monthly payment. The connection runs through interest rates. Every dollar of deficit is a dollar Treasury must borrow in the bond market, mostly from American investors, funds and institutions. More borrowing means more supply of Treasury debt, and investors want a higher return to absorb it. Those Treasury yields then set the floor for mortgage rates, car loans and business credit.
Interest on the debt also crowds out everything else in the budget. At more than $1 trillion a year, interest on the national debt now costs more than national defense. That money builds no roads, pays no troops and secures no border. It simply services past borrowing.
Then there is the bill that comes due later. A $2 trillion annual deficit is borrowing against the paychecks of today’s children. CBO put the fiscal 2026 deficit at 6.2% of GDP, compared with a 50-year average of 3.8%. Running gaps that size outside a war or a recession leaves little room to respond when a real downturn arrives.
What to Watch Before December 11
- Treasury’s official October statement. Treasury expects to publish its Monthly Treasury Statement for October this week. It will confirm CBO’s estimate and, more importantly, show the customs and corporate tax lines.
- The Dec. 11 funding deadline. Government funding expires that day. A clean stopgap holds spending flat for now. A large package loaded with new spending would widen the gap before the year has barely started.
- November’s numbers. Because early payments moved out of November and into October, next month’s deficit should look smaller. Do not mistake that calendar effect for progress.
- Tariff refunds winding down. Once the remaining IEEPA refunds clear, customs receipts should stabilize at a lower level. That will tell us what the remaining tariffs actually raise.
The October federal deficit does not require new taxes to fix. Revenue is already at a record. What it requires is a Congress willing to slow the growth of spending, starting with the programs that run on autopilot. Until that happens, every new fiscal year will open the same way: deeper in the red than the last.
Sources
- Congressional Budget Office: Monthly Budget Review: Summary for Fiscal Year 2026, including the October 2026 estimate (Nov. 9, 2026)
- U.S. Treasury, Fiscal Data: Monthly Treasury Statement, Tables 1, 4 and 9 (October 2015 through September 2026)
- Committee for a Responsible Federal Budget: CBO Estimates $409 Billion Deficit for First Month of Fiscal Year 2027 (Nov. 9, 2026)
- Committee for a Responsible Federal Budget: 12-Month Rolling Deficit Is $2.1 Trillion in October 2026 (Nov. 10, 2026)
- American Action Forum: CBO: FY 2026 Budget Deficit Totaled $2 Trillion (summary of CBO’s September 2026 Monthly Budget Review, including IEEPA tariff refunds)
