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. This includes a $307 billion deficit for February, which was President Donald Trump’s first full month in office. While this number may seem alarming, it is important to understand the factors that have contributed to this deficit and what steps are being taken to address it.
The October-February deficit, which also includes the first four months of President Joe Biden’s term, has surpassed the previous record of $1.047 trillion from the same period in the previous fiscal year. This can be attributed to the high spending on COVID-19 relief measures and the impact of the pandemic on government revenues.
In February, the deficit rose by $11 billion compared to the same month in 2024. This can be attributed to the increase in outlays for debt interest, Social Security, and healthcare benefits, which have outweighed the growth in revenues. However, it is important to note that the results do not show a significant impact from Trump’s initial import tariffs or his administration’s efforts to reduce government spending.
Despite the challenges posed by the pandemic, February saw record receipts of $296 billion, which is a 9% increase from the previous year. This is a positive sign of economic recovery and growth. However, outlays for the month also reached a record high of $603 billion, a 6% increase from the previous year.
After adjusting for calendar shifts in both receipts and outlays, the adjusted deficit for February would have been $311 billion, matching the record deficit reported in February 2021, which was driven by COVID-19.
The Committee for a Responsible Federal Budget, a fiscal watchdog group, has expressed concern over the government’s borrowing, which currently stands at an average of $8 billion per day for this fiscal year. The group’s president, Maya MacGuineas, stated that there has been no progress in controlling the skyrocketing debt, even though we are almost halfway through the fiscal year.
Fiscal year-to-date receipts have risen by 2%, reaching a record high of $1.893 trillion. However, outlays have grown by 13%, reaching a record high of $3.039 trillion. After adjusting for calendar shifts, the adjusted year-to-date deficit would have been $1.063 trillion, still a record and a 17% increase from the previous year.
The effects of Trump’s tariffs on major trading partners and the Department of Government Efficiency (DOGE) led by Elon Musk have not had a significant impact on the overall budget. The additional 10% tariff imposed on Chinese imports in February did not materially affect customs receipts, and the increase to 20% in March will likely be reflected in the data for that month.
Customs receipts for February totaled $7.25 billion, slightly lower than January’s $7.34 billion but higher than February 2024’s $6.21 billion. The budget results for February also did not show any significant changes in overall outlays as a result of DOGE’s efforts to reduce the federal workforce and government spending.
The Department of Education, which has been a major target for cuts by DOGE, saw a decrease in outlays from $14 billion to $8 billion in February. This was due to reductions in spending on elementary and secondary education programs. The U.S. Agency for International Development, which the Trump administration has attempted to dismantle, still had an outlay of $226 million in February, compared to $542 million in the previous year.
The growth in spending for February and the year-to-date period can be attributed to higher spending on Treasury’s interest on the public debt, outlays for Child Tax Credit payments, and increased Social Security payments. This includes a 2.5% cost-of-living adjustment for 2025. Treasury’s interest costs for the public debt have increased by 10%, reaching $478 billion, which is higher than the $380 billion spent on military outlays. Social Security outlays have also grown by 8%, reaching $663 billion.
In conclusion, while the U.S. budget deficit for the first five months of fiscal 2025 has reached a record high, there are positive signs of economic growth and recovery. The increase in receipts and the decrease in outlays for certain departments are a testament to the government’s efforts to manage the deficit. However
