Why We Have Federal Deficits: 2026 Update

Abstract: The study quantifies contributions to the federal government’s fiscal imbalance according to three criteria: (1) the share of the federal government’s long-term fiscal imbalance attributable to specific legislation, (2) the share of the current fiscal year federal deficit attributable to specific legislation, and (3) the amounts of federal deficits attributable to different lawmakers’ fiscal management. Medicare spending growth is the leading contributor to the federal government’s long-term fiscal imbalance, followed by recent tax cuts, expanded health insurance subsidies through Medicaid and the Affordable Care Act (ACA), and Social Security. Overall, nearly three-quarters of the long-term fiscal imbalance is attributable to excess spending growth and slightly more than one-quarter to tax cuts. More than 87 percent of the long-term fiscal imbalance was legislated in two concentrated periods, the first being from 1965 to 1972, the second from 2010 to the present. Contributions to the current fiscal year (FY 2026) deficit are more diffuse. Nearly two-thirds of the FY 2026 deficit is attributable to excess spending growth, with slightly more than one-third attributable to tax cuts. Broken down into smaller categories, the largest contributors to the current year deficit are, in order, tax cuts, Medicaid/ACA, Medicare, Social Security, and veterans’ and military spending increases. Nearly 85 percent of the FY 2026 deficit was legislated either in the years 1965–1972 or from 2010 to the present. Assuming a 50–50 division of responsibility between the president and Congress for budget policy decisions, the single largest contributor to both the current-year and long-term fiscal imbalance is current president Donald J. Trump, replacing former president Lyndon B. Johnson, who held the first position in the 2021 update of this study. Tax cuts enacted during President Trump’s two terms are responsible for his replacing former President Johnson in the top position. 

Results in Brief

This recurring study tabulates and quantifies legislated contributions to the federal government’s fiscal imbalance according to three metrics: (1) the share of the federal government’s structural, long-term fiscal imbalance attributable to the legislation; (2) the share of the current fiscal year (FY 2026) federal deficit attributable to the legislation; and (3) the amounts of federal deficits (as a percentage of GDP) attributable to different lawmakers’ fiscal management. Understanding what pieces of legislation have contributed the most to the federal fiscal imbalance is crucial so that policymakers can implement appropriate reforms. 

The methodology and rationale underlying these three views of the federal fiscal imbalance are explained in previous editions of this study and briefly summarized in the methodology section of this paper (page 16).¹The first two views can be thought of as fiscal sins of commission: that is, to what extent specific legislation contributed to the current fiscal imbalance, the first view examining its growth over time and the second its magnitude in the current fiscal year. The third measure quantifies fiscal sins of omission: that is, failures to contain the magnitudes of federal deficits, a responsibility that sitting lawmakers bear irrespective of whether particular deficit-increasing legislation was enacted on their watch or at an earlier time. Each of the three views represents a reasonable perspective on federal budgeting responsibility. 

To approach necessary fiscal corrections in an informed way, it is useful to know which legislation did the most to create the current fiscal imbalance and, thus, which modifications of existing law would do the most to improve the situation. To achieve this, one must lift one’s sights from the political battles of the moment to focus on which legislation has mattered most from a budgeting perspective, irrespective of what part of the budget it involves and irrespective of whether this deficit-driving legislation was enacted recently or long ago. This perspective underlies the first two metrics analyzed in this study. At the same time, those who enacted legislation years ago did not have nearly as much information about its costs as do current lawmakers. Accordingly, current lawmakers bear just as much responsibility to contain the growing costs of inherited programs as they do to avoid creating new fiscal problems. This perspective underlies the third metric.

Table 1 quantifies the relative contributions of the pieces of legislation that created the current fiscal imbalance. A striking finding of the analysis, which repeats the general conclusions of earlier editions of this study, is that the persistently worsening fiscal imbalance is entirely attributable to legislative activity concentrated in just a few areas of the budget: Medicare, tax policy, Medicaid and the Affordable Care Act (ACA) health exchanges, and Social Security. All other areas of the federal budget, including defense and nondefense annual appropriations as well as all mandatory spending apart from the aforementioned programs, contribute nothing to the long-term problem in the sense that their currently projected expenditures are well below levels affordable within a balanced budget, assuming that future federal spending is distributed between all other categories in a manner consistent with historical practice. Payments of interest on federal debt obligations are also far above historical norms, but as these result directly from other spending and tax policies, their effects have been distributed proportionally between those policies. Table 8 (page 19) explains the derivation of this analysis, while the figures in appendix B (page 27) further illustrate how the entire long-term fiscal problem is attributable to legislative activity in just these few budget categories.

The Long-Term Fiscal Imbalance

Of the long-term fiscal imbalance, 73.8 percent is attributable to spending exceeding sustainable levels, while 26.2 percent is attributable to tax collections falling short of sustainable levels. Though the long-term problem remains primarily spending growth, the contribution of tax cuts to the problem has grown substantially since the previous edition of this study was published in 2021. At that time, the share of the long-term problem attributable to tax policy was only 16.8 percent. The nearly three-quarters of the problem now attributable to excess spending growth includes 44.3 percent of the total problem attributable to Medicare, 20.3 percent to Medicaid and the health exchanges established under the ACA, and 9.2 percent to Social Security.

Table 1 quantifies the extent to which specific legislation has created the federal government’s escalating fiscal imbalance. Historically (from 1973 to 2025), federal spending has averaged 21.0 percent of GDP while tax collections have averaged 17.3 percent of GDP.²Assuming neutrality with respect to whether this past difference would better have been eliminated by additional spending restraint or greater tax collections, and minimizing hypothetical departures from historical practices, results in a benchmark of approximately 19.2 percent of GDP for both spending and revenues in a balanced budget. Going forward, the extent to which spending is currently projected to exceed this amount, and the extent to which revenues are projected to fall short of this amount, is entirely attributable to the legislative actions specified in table 1.

Net Medicare spending (gross spending minus offsetting receipts) is far and away the largest contributor to the federal fiscal imbalance at 44.3 percent of the total. This is true despite repeated efforts by lawmakers over several decades to contain the growth of Medicare spending. All the excess Medicare spending growth is attributable to three pieces of legislation: the original enactment of Medicare in 1965 (20.5 percent of the total imbalance), the program’s expansion in 1972 (15.5 percent), and the addition of the Part D prescription drug benefit in 2003 (8.2 percent).³

Slightly more than one-quarter of the long-term fiscal imbalance is attributable to tax cuts. The biggest contributor on this side of the ledger is the tax cut contained in the One Big Beautiful Bill Act of 2025, which by itself accounts for 20.7 percent of the long-term fiscal imbalance, more than any other single piece of legislation. The remainder of the revenue shortfall comes from the 2019 repeal of the taxes (e.g., the Cadillac health plan tax, the medical device tax, and the health insurance tax) originally intended to finance a significant portion of the 2010 ACA. Were it not for these two recent tax cuts, tax revenues going forward would exceed the 19.2 percent of GDP sufficient to maintain balanced budgets by historical standards. In other words, the current long-term fiscal imbalance would be entirely attributable to spending growth were it not for tax cuts enacted in the past seven years.

Medicaid, the Children’s Health Insurance Program (CHIP), and the ACA’s health insurance marketplace subsidies are grouped by the Congressional Budget Office (CBO) into a single category for long-term projection purposes. This spending category accounts for 20.3 percent of the fiscal imbalance. The vast majority of this contribution (15.4 percent of the total imbalance) was legislated in the 2010 ACA, which established the health insurance marketplace subsidies and dramatically expanded Medicaid. The remainder of the excess Medicaid spending growth is a result of program expansions that occurred in 1986–1990 and 1971–1972. Unlike with Medicare, where the vast majority of its contribution to the fiscal problem derives from its original enactment, with Medicaid the problem has arisen from repeated program expansions, most recently and greatly in the 2010 ACA.

Social Security spending is the other significant contributor (9.2 percent) to the federal fiscal imbalance. A small piece of this contribution (0.5 percent of the total) derives from the 2024 Social Security Fairness Act (SSFA), which permits state and local pension plan participants to receive additional Social Security benefits that their own contributions have not financed.⁴The remainder of Social Security’s contribution (8.8 percent of the total) derives from automatic annual Social Security benefit increases first legislated in 1972, which continue today and into the future under current law.⁵

Table 2 breaks down the development of the federal fiscal imbalance according to when the components were generated.

This table shows how the preponderance of the federal government’s worsening fiscal imbalance was created in two periods of concentrated fiscal irresponsibility: the first from 1965 to 1972, the second beginning in 2010 and continuing into the present. Remarkably, over 87 percent of the fiscal imbalance was created in these two periods. The period 1965–1972 could be interpreted as a time of legislative hubris during which lawmakers failed to appreciate the magnitude of the escalating expenditure obligations they were creating, first by establishing Medicare and Medicaid and later by expanding both programs as well as Social Security. The period from 2010 to the present similarly began with mandatory spending expansions, including the expansion of Medicaid and the establishment of health marketplace subsidies in the ACA, creating escalating expenditure obligations with inadequate financing. The latter half of the current period has been marked by tax cuts in the absence of spending restraint: first the 2019 repeal of the taxes intended to finance the ACA, and more recently the 2025 One Big Beautiful Bill Act (OBBBA) tax cuts.

Neither major political party has a clearly superior claim to fiscal responsibility. Roughly 65 percent of the current imbalance was enacted during periods when Democrats controlled both houses of Congress. Roughly 29 percent was enacted when Republicans controlled both houses (all of it in two pieces, the 2025 OBBBA and Medicare Part D in 2003). Only 6 percent of the damage occurred when Congress was under split control. But while Republicans have the better fiscal track record in Congress, the reverse is true of the White House: More than 63 percent of the fiscal damage was enacted during Republican presidencies. The most striking patterns are not political but variances across time: the escalating spending enacted during the 1965–1972 period, the period of fiscal moderation from 1973 through 2009, and the multiple fiscal transgressions on both the spending and revenue sides committed from 2010 through the present.

Remarkably, only 13 percent of the long-term fiscal shortfall was legislated during the combined presidencies of Ford, Carter, Reagan, Bush 41, Clinton, and Bush 43. The rest, more than 87 percent, was legislated solely during the presidencies of Lyndon B. Johnson and Nixon (1965–1972) and Obama, Trump, and Biden (2010 through the present).

The Fiscal Year 2026 Deficit

It is typical for the annual federal deficit in any single fiscal year to have more contributors than the structural long-term imbalance, in part because the current fiscal year deficit is often more greatly affected by recent legislation. The current fiscal year of 2026 is no exception. Table 3 shows legislated contributions to the federal deficit in fiscal year 2026.

Nearly two-thirds (65.9 percent) of the fiscal year 2026 deficit is attributable to excess spending growth, although recent tax cuts also make a significant contribution (34.1 percent). The tax cuts that cause 2026 revenues to fall below balanced-budget norms are the 2025 OBBBA (30.2 percent of the total deficit, more than any other single piece of legislation), the 2019 repeal of the taxes originally intended to finance the ACA (3.5 percent), and the Tax Cuts and Jobs Act of 2017 (0.4 percent).

On the spending side, the biggest contributor to the 2026 deficit is the budget category encompassing spending on Medicaid and the ACA’s health insurance marketplace subsidies. As with the long-term fiscal imbalance, the largest contributors to excess spending growth in 2026 in this category are the Affordable Care Act (18.3 percent of the total) and the Medicaid expansions of 1989–1990 (2.8 percent), 1987–1988 (1.4 percent), and 1971–1972 (2.4 percent). Unlike with the long-term imbalance, a small piece of the 2026 deficit is attributable to the Medicaid increase in the 2021 American Rescue Plan (0.2 percent) and to Medicaid’s initial enactment in 1965 (0.9 percent).

Medicare’s contribution to the 2026 deficit is large (21.9 percent), but not as large as its contribution to the long-term fiscal shortfall, because its contribution progressively mounts as increasing numbers of Americans continue to retire and claim Medicare benefits. As with the long-term shortfall, most of Medicare’s contribution to the 2026 deficit is the result of three pieces of legislation: the original enactment of Medicare in 1965 (2.6 percent), its expansion in 1972 (10.0 percent), and the addition of the Part D prescription drug benefit in 2003 (8.2 percent). The 2015 Medicare Access and CHIP Reauthorization Act (MACRA) temporarily increasing physician payment rates also makes a contribution (1.0 percent). A further small addition to the 2026 deficit comes from the 2025 reconciliation bill (0.1 percent) that was grouped with Medicare spending in CBO’s February 2026 Budget and Economic Outlook.⁶

Social Security also makes a significant contribution (10.4 percent) to the 2026 deficit. As with the long-term fiscal imbalance, a small piece of this contribution to the FY 26 deficit (0.9 percent of the total) derives from the SSFA, while the rest (9.5 percent) comes from the automatic benefit increases first legislated in 1972.

Spending increases targeted toward military personnel account for 7.6 percent of the 2026 deficit. The majority of this (4.4 percent of the total) comes from the Honoring Our PACT Act enacted in 2022, which increased health coverage and benefits for veterans exposed to toxic substances during military service. Legislation increasing net military retirement spending was enacted in 2015 (0.4 percent of the total) and 2003 (0.4 percent). Veterans’ benefit increases in 2008 (1.8 percent of the total) and 1991 (0.6 percent) also contributed to the 2026 deficit.

In sum, as table 4 shows, the entire 2026 deficit is attributable to recent tax cuts in combination with increased spending on Medicare, Medicaid, the Affordable Care Act, Social Security, military retirement, and veterans’ benefits.

Although contributions to the FY 2026 deficit are more diffuse than the few drivers of the worsening long-term fiscal imbalance, the 2026 deficit was also almost entirely legislated during the same two periods of fiscal recklessness, 1965–1972 and 2010 to the present. Nearly 85 percent of this year’s deficit was enacted during these two periods, with the combined presidencies from Ford through Bush 43 accounting for barely 15 percent of the current deficit.

Allocating Responsibility

The long-standing methodology underlying this study is to apportion responsibility for budgetary decisions 50–50 between Congress and the US president, with Congress’s 50 percent share split evenly between the House of Representatives (25 percent) and the Senate (25 percent). Total responsibility for legislation moving through the House is assigned to the House majority, reflecting the control over the legislative agenda held by the majority in that chamber. Of the 25 percentage points allocated to the Senate side, 20 points are assigned to the majority and 5 to the minority, reflecting the fact that the Senate majority has historically wielded substantial but not total control of legislative outcomes, with the minority somewhat empowered to influence legislation.

In recent years, the relative power of the Senate minority appears to have shrunk, and an argument could be made that responsibility shares in the Senate should now be charged almost exclusively to its majority. On the other hand, it is possible that 5 percent understates the Senate minority’s influence in earlier periods, so 5 percent remains a reasonable quantification of its average relative influence over time. Regardless, slight adjustments to the apportionment of responsibility between the Senate majority and minority would not make a qualitative difference to the responsibility shares shown in table 5. A fuller explanation of this methodology is provided in earlier editions of this study, including an explanation of how responsibility is distributed based on periods of uninterrupted control of congressional chambers.⁷

If the president bears 50 percent of the responsibility for federal budget practices, President Donald J. Trump emerges as the greatest single contributor to the long-term fiscal imbalance. This is due to two of the laws he signed cutting taxes, the 2025 OBBBA and the 2019 repeal of taxes previously intended to finance the ACA. Note that this quantification of responsibility is based on the latest budget projections from the Congressional Budget Office, after which the US Supreme Court found President Trump’s justification for imposing tariffs to be unconstitutional.⁸President Trump’s share of responsibility will remain the same if he successfully invokes other presidential authorities to apply the same amount of tariffs, but his share could become larger if he does not. The next leading contributors to the long-term fiscal imbalance all come from the 1965–1972 period: Presidents Lyndon B. Johnson and Richard M. Nixon, as well as the Democratic majority in both houses of Congress throughout that time.

It is typical for a relatively larger share of the responsibility for the current-year fiscal deficit to lie with current officeholders, and 2026 is no exception, as table 6 shows.

The biggest single legislative contribution to the fiscal year 2026 deficit was the OBBBA, enacted in 2025 under current President Donald J. Trump with Republican majorities in both chambers of Congress. After the OBBBA, the largest contributions to the current fiscal year deficit occurred during the presidencies of Richard M. Nixon (expansions of Medicare, Medicaid, and Social Security) and Barack H. Obama (mostly the expansion of Medicaid and new health marketplace subsidies enacted in the 2010 Affordable Care Act, with smaller increases in Medicare and military retirement spending enacted toward the end of his second term).

As in previous editions, this study presents a third view of budgetary behavior in which elected officials are evaluated not only for the legislation they enact, but for the fiscal imbalances overseen during their times of office, irrespective of when the legislation creating them was originally enacted. Implicit in this view is a judgment that current officeholders bear responsibility for any ongoing imbalances in federal finances, and accordingly they are accountable not only for enacting new deficit-increasing legislation, but for failing to correct problematic fiscal effects of previously enacted legislation.

Table 7 exhibits fiscal stewardship records for elected officeholders, calculating their average share of responsibility for federal deficits (or surpluses), as a share of GDP, during the largest-deficit four- or eight-year span during the officeholders’ continuous periods in presidential office or as the majority in a congressional chamber. As with the previous calculations, 50 percent responsibility is assigned to the sitting president, 25 percent to the US House majority, 20 percent to the US Senate majority, and 5 percent to the US Senate minority.

There are similarities and differences between the different views of responsibility depicted in tables 5, 6, and 7. Under any view, the Trump presidencies have been periods of exceptional additions to federal deficits and debt, a characterization also true of the Obama presidency to a lesser extent. The same is true of the Congresses that served alongside those two presidents. Other presidencies and Congresses look more or less culpable as a function of the view taken. Legislation enacted during the Nixon presidency by an all-Democratic Congress added significantly to today’s federal deficit as well as to the projected long-term fiscal imbalance, but it did not result in especially large deficits at the time. On the other hand, President Biden presided over exceptionally large annual federal deficits, but very little of the current or projected fiscal imbalance is attributable to legislation enacted during his presidency.

Methodology

The methodology underlying this study is explained in greater detail in previous editions, but the essential method is to compare current and projected levels of spending and revenues to historical norms averaged over the years 1973–2025 in this update).⁹Federal revenues averaged 17.3 percent of GDP throughout this period, and federal spending averaged 21.0 percent of GDP. This means that under an approach of neutrality with respect to whether the gap between spending and revenues would better have been closed by increased tax collections or greater spending restraint, the historical norm for balanced budgeting would have been spending and revenues each equaling approximately 19.2 percent of GDP. The extent to which current and projected spending exceeds 19.2 percent of GDP, or the extent to which current and projected tax collections fall short of 19.2 percent of GDP, may or may not reflect the extent of departure from one’s preferred budget policies. Nevertheless, they do represent the extent to which greater spending and lesser tax collections than historical averages have caused the fiscal imbalance to emerge.

This study examines budget outcomes with respect to three vantage points: (1) the effects of legislation upon the federal government’s escalating fiscal imbalance, (2) the effects of legislation upon the current fiscal year budget deficit, and (3) the sizes of annual federal deficits overseen by sitting officeholders. The last of these three metrics is self-explanatory and can be easily calculated by referring to public reports on federal deficits. The first two are far more complex and require deep study of published analyses (primarily from CBO and the Office of Management and Budget) of both the projected and actual fiscal effects of legislation. For purposes of this update, the current fiscal year is 2026. The year 2040 is used as a proxy for the long-term imbalance because it is a year by which critical short-term trends will have played out, most notably the movement of the historically large baby boom generation onto federal retirement benefit rolls. Current projections are such that by the time 2040 has arrived, mandatory spending and tax collections will each have settled into a pattern that will simply accelerate after that date.

Table 8 displays the shares of both current and long-term deficits arising from different categories of the federal budget.

Interest costs make a significant contribution to federal deficits both in 2026 and over the long term. While interest is technically grouped with other spending in CBO’s and other budget tables, both spending increases and tax cuts can result in additional indebtedness and thus additional interest costs. Hence, in this study interest costs have been distributed between both spending’s and tax cuts’ contributions to the fiscal imbalance, in proportion to each side of the ledger’s relative contribution among noninterest deficit drivers.

CBO does not provide as much granular budget detail in its long-term projections as in its 10-year budget outlooks; it breaks down federal spending into many more line items in its short-term projections than in its long-term estimates. For example, over the long term, CBO groups Medicaid, CHIP, and the ACA health marketplace subsidies into a single spending category, whereas in the near term it distinguishes spending on these different programs. Similarly, CBO provides more detailed information on net versus gross spending in Social Security and other mandatory spending programs in the near term relative to the long term. CBO’s long-term projections group together income security, federal (civilian and military) retirement, veterans’ benefits, and other mandatory spending in a single column. Closer examination of the spending trends in these individual programs over the next several years makes clear that neither separately nor in the aggregate are they drivers of the fiscal imbalance over the long term, including the military retirement and veterans’ benefit programs that are contributing to the 2026 deficit.

Table 8 shows that, both currently and over the long term, federal deficits have grown primarily because of excess spending growth in Medicare, Medicaid, CHIP, the ACA exchanges, and Social Security. All current and projected appropriations, including defense as well as nondefense spending, remain below historical norms as a percentage of GDP and below the levels that could be afforded within a budget balanced consistent with historical spending allocations. Whereas net Medicare spending averaged 2.11 percent of GDP from 1973 to 2025, it currently stands at 3.33 percent of GDP and is projected to increase to 4.57 percent of GDP by 2040. Medicaid, CHIP, and ACA spending averaged 1.30 percent of GDP from 1973 to 2025 but have already grown to 2.65 percent of GDP in 2026. Gross Social Security spending averaged 4.42 percent of GDP from 1973 to 2025 but is currently 5.22 percent of GDP and is projected to reach 5.81 percent of GDP by 2040. Federal retirement and veterans’ benefits, which averaged 0.92 percent of GDP from 1973 to 2025, currently equal 1.36 percent of GDP.

Both current (17.54 percent of GDP) and projected (18.00 percent of GDP in 2040) federal tax collections are higher than historical averages over the 1973–2025 period (17.32 percent of GDP). Historical tax collections have on average been inadequate to support federal spending, however, and 19.18 percent of GDP represents the midpoint of historical tax and spending levels, such that tax collections of 19.18 percent of GDP can be interpreted as the amount sufficient to support balanced budgets under historical practice. Both current and projected federal tax collections would exceed this taxation level were it not for the most recent rounds of tax cuts in 2025, 2019, and 2017. In other words, no tax regime adopted at any time prior to 2017 is contributing to the current fiscal imbalance.

While there is no objectively correct way to perform an assessment of contributors to the US fiscal imbalance, there are incorrect ways of doing so. One example would be to measure the effects of legislation only in certain areas of the federal budget, while excluding others from analysis and review. For example, an analysis that examines legislative decisions made only after an arbitrarily selected date will by construction assign a disproportionate share of responsibility for current fiscal imbalances to actions taken immediately after that date, while ignoring the effects of all legislation enacted before that date, even if the previous legislation continues to have enormous budgetary effects. Such a methodology can succeed in casting unflattering light on a chosen political target (i.e., someone who took office at the point the methodology begins tracking responsibility) but is not useful for understanding the relative importance of different legislation’s effects on the federal budget.

Nor is it useful to assign responsibility for current fiscal imbalances by comparing current realities to prior projections. Prior projections were merely that—projections, relative to which ultimate reality often turned out very different. For example, many forecasters (including CBO) failed to predict the 2007–2009 financial markets downturn and recession, the COVID-19 pandemic, the bursting of the late-1990s dot-com bubble, or the full costs of the Affordable Care Act. What matters is not how the current picture looks relative to previous guesses, but how spending and revenue collections have actually unfolded as a result of policymakers’ decisions.

Another common error is inconsistency in assigning responsibility for different changes in law. If a law is initially enacted to take effect for a limited time period such as 5 or 10 years, but is later permanently extended, responsibility for its permanent extension is properly assigned to the lawmakers who enacted the extension, whereas those who passed the initial law are responsible only for that first 5 or 10 years. This is true irrespective of the economic or political implications of extending a law or of allowing it to expire. It is not appropriate for a study of the budget to base its findings on rationales for lawmakers’ behavior, whereas budgetary consequences are properly associated with the legislation that actually caused them.

Changes Since the 2021 Update of This Study

Table 9 compares the leading drivers of the long-term fiscal imbalance as identified in this update with those identified in the 2021 version of this study.

The results in 2026 are qualitatively similar to those generated in 2021, in that most of the escalating fiscal imbalance is owing to mandatory spending programs. Medicare is the leading driver on the spending side, followed by Medicaid/CHIP/ACA and Social Security. The most significant difference between the 2026 and 2021 projections, as table 10 shows, is that tax cuts have become a relatively larger contributor to the long-term federal fiscal imbalance, primarily due to the 2025 OBBBA.

The components of the federal deficit in 2026 are very different than they were in 2021. This is primarily because 2021 was an exceptional year, a pandemic year, when various forms of temporary relief spending brought the federal deficit to historic highs. The 2021 deficit was more than twice the 2026 deficit as a share of GDP, although the 2026 deficit is also substantially higher than historical norms. Other examples of elevated spending in 2021 included income security spending (e.g., refundable tax credits and unemployment compensation), “other programs” (e.g., assistance to state and local governments, higher education funding, and emergency rental assistance), and increased nondefense appropriations. The 2026 results differ from the 2021 results in part because most of 2021’s spending in response to the pandemic has expired and in part because lawmakers have enacted additional tax cuts and increased veterans’ benefits.

Table 11 shows how the assessment of the leading contributors to the long-term federal fiscal imbalance has changed since 2021. Lyndon B. Johnson, Richard M. Nixon, and the Congresses of 1965–1972 are among the biggest contributors to the long-term federal fiscal imbalance, as assessed in both 2021 and 2026. This is due to their having enacted Medicare and Medicaid, as well as later expanding both programs along with Social Security. Current President Donald J. Trump has recently surpassed them as a contributor to the persistently widening federal fiscal imbalance, primarily due to tax cuts enacted during both of his terms while working with Congresses of different compositions.

Appendix A. Components of Shares of Responsibility for Deficit Drivers

Table 12 provides a detailed breakdown of the legislative actions taken by each contributor in creating the long-term fiscal imbalance.

Table 13 provides a detailed breakdown of the legislative actions taken by each contributor in creating the FY 2026 federal deficit.