The U.S. budget deficit for the first five months of fiscal 2025 has reached a record high of $1.147 trillion, according to the Treasury Department’s latest report released on Wednesday. This includes a February deficit of $307 billion, a 4% increase from the previous year, marking President Donald Trump’s first full month in office.
The October-February deficit, which also includes almost four months of former President Joe Biden’s term until January 20, surpassed the previous record of $1.047 trillion from October 2020 to February 2021. This period was characterized by high expenses for COVID-19 relief and limited revenues due to the ongoing pandemic.
Despite efforts made by the Trump administration to reduce government spending, the results showed little impact from his initial import tariffs on major trading partners. In fact, February’s receipts totaled $296 billion, a record high for the month and an increase of 9% from the previous year. However, outlays for debt interest, Social Security, and healthcare benefits outweighed this growth in revenues, totaling $603 billion, also a record high for the month and a 6% increase from the previous year.
After adjusting for calendar shifts, the adjusted deficit for February would have matched the record reported budget deficit in 2021, which was primarily driven by the effects of COVID-19. The Committee for a Responsible Federal Budget, a fiscal watchdog group, expressed their concern over the increasing government borrowings, which amount to approximately $8 billion per day this fiscal year.
Maya MacGuineas, the group’s president, stated in a press release, “What needs no confirmation is that we are almost halfway through the fiscal year, and yet we have done nothing in the way of making progress toward getting our skyrocketing debt under control.”
Despite the increase in receipts by 2% to a record high of $1.893 trillion for the fiscal year, outlays have grown by 13%, reaching a record high of $3.039 trillion. Even after adjusting for calendar shifts, the adjusted year-to-date deficit still stands at a record high of $1.063 trillion, a 17% increase from the previous year.
One factor that may have contributed to these results is the effects of Trump’s tariffs and the emerging popularity of cryptocurrency Dogecoin (DOGE). In February, Trump imposed an additional 10% tariff on Chinese imports, which did not have a significant impact on customs receipts last month but is likely to reflect in March’s data. Furthermore, Trump increased the extra duty on Chinese goods to 20% on March 4.
Despite initiatives by the Trump administration to cut federal workforce and government spending through the Department of Government Efficiency led by billionaire entrepreneur Elon Musk, there was no noticeable change in overall outlays for February. However, the Department of Education, one of the primary targets for cuts under the Department of Government Efficiency, saw a decrease in outlays from $14 billion to $8 billion. A Treasury official attributed this decline to reductions in outlays for elementary and secondary education programs.
Interestingly, despite the Trump administration’s attempts to dismantle it, the U.S. Agency for International Development still showed an outlay of $226 million in February, compared to $542 million in the previous year. This figure may be attributed to ongoing projects and programs that were already in motion.
The growth in spending for February and the year-to-date period was primarily driven by higher expenses for Treasury’s interest on the public debt, outlays for Child Tax Credit payments, and increased Social Security payments. These factors, coupled with a 2.5% cost-of-living adjustment for 2025, resulted in a 10% increase in Treasury’s interest costs for the public debt, reaching $478 billion. This surpasses military outlays, which totaled about $380 billion. Social Security outlays also increased by 8%, reaching approximately $663 billion for the year-to-date period.
In conclusion, the U.S. budget deficit has reached a record high for the first five months of fiscal 2025, surpassing the previous year’s record. Factors such as COVID-19 relief spending, limited revenues due to the pandemic, and increased government borrowings have contributed to these results. Despite efforts made by the Trump administration to reduce government spending, there has been no significant impact on the overall deficit. It remains to be seen how the Biden administration will handle the budget deficit and work towards controlling
