The US deficit for the first four months of fiscal Year 2025 is $838 billion, up $306 billion. Adjusted, the increase is more like $157 billion to $225 billion. 
The Congressional Budget Office Spending Projections for fiscal year 2025 are not looking good.
The federal budget deficit totaled $838 billion in the first four months of fiscal year 2025, the Congressional Budget Office estimates. That amount is $306 billion more than the deficit recorded during the same period last fiscal year. Revenues were $11 billion (or 1 percent) higher, and outlays were $317 billion (or 15 percent) higher.
The change in the deficit was influenced by the timing of outlays and revenues, which decreased the deficit during the first four months of fiscal year 2024 but increased it during the same period this fiscal year. Outlays in October 2023 were reduced by shifts in the timing of payments that were due on October 1, 2023, a Sunday. (The payments were made that September.) Outlays in the first four months of 2025 rose, on net, because payments due on February 1, 2025, a Saturday, were made in January. If not for those shifts, the deficit so far this fiscal year would have been $750 billion, or $146 billion more than the shortfall at this point last year. Part of the deficit increase in 2025 also arises from the postponement of some tax deadlines from 2023 to 2024 (described below), which boosted receipts in 2024.
Budget Ceiling Yet Again
The statutory debt limit was reinstated on January 2, 2025, and set at $36.1 trillion, matching the amount of total debt that was outstanding on the prior day. On January 21, 2025, the Department of the Treasury announced a “debt issuance suspension period” and began taking “extraordinary measures” to continue financing government operations without breaching the debt limit. In the future, CBO will publish its estimate of how long the government could continue to finance its operations under those measures.
Total Outlays Up by 15 Percent in Fiscal Year 2025
Outlays in the first four months of fiscal year 2025 were $2.4 trillion, CBO estimates, $317 billion more than during the same period last year. If not for the timing shifts discussed above, outlays so far in fiscal year 2025 would have been $157 billion (or 7 percent) greater than outlays during the same four months in fiscal year 2024. The discussion below reflects adjustments to exclude the effects of those timing shifts.
Notably, outlays are up despite a reduction of $68 billion in FDIC bank failures.
If we subtract the budget shifts and account for one-time FDIC losses, outlays are up by about $225 billion on a comparable basis.
Mandatory Spending
- Outlays for the largest mandatory spending programs increased by $62 billion (or 6 percent):
- Spending for Social Security benefits rose by $31 billion (or 7 percent) because of increases in the average benefit payment (stemming mostly from cost-of-living adjustments) and in the number of beneficiaries.
- Medicare outlays increased, on net, by $14 billion (or 5 percent) because of increased enrollment and higher payment rates for services.
- Medicaid outlays increased by $17 billion (or 9 percent), largely because of rising costs per enrollee.
- Outlays for net interest on the public debt increased by $37 billion (or 13 percent) primarily because the debt was larger than it was in the first four months of fiscal year 2024.
Other Large Spending
- Spending by the Department of Defense was $24 billion (or 8 percent) greater than in the same period in fiscal year 2024; the largest increases were for operation and maintenance and personnel.
- Spending by the Environmental Protection Agency (EPA) increased by $22 billion, CBO estimates, primarily because in November and December that agency spent $20 billion for a grant program established by the 2022 reconciliation act ($27 billion was provided in that law for the program). EPA selected 68 entities—including nonprofit organizations, state governments, and Indian tribes—to administer grants to finance clean technologies, provide capital for energy-efficiency projects in disadvantaged communities, and support solar power projects in low-income communities.
- Spending by the Department of Veterans Affairs increased by $18 billion (or 17 percent), because more people used veterans’ benefits and because of increased spending per person.
- Outlays of the Department of Homeland Security increased by $12 billion (or 43 percent), driven mostly by spending in response to Hurricanes Helene and Milton.
- Outlays for certain refundable tax credits increased by $11 billion (or 29 percent), primarily because of increased enrollment in health insurance purchased through the marketplaces established under the Affordable Care Act.
Does anyone seriously think Trump or DOGE will fix this?
If so, please note Trump proposes to expand tax breaks on State and Local Taxes (SALT), eliminate taxes on tips, eliminate taxes on overtime, and eliminate taxes on overtime.
Trump has also proposed increases on military spending.
And the more Trump relies on tariffs, the less likely the administration will break even. I rate it a 90 percent chance Trump increases the deficit significantly.
2018 vs Today
On December 25, 2018, I reported Investigating Trump’s Claim of Using Tariffs to Pay Down $21 Trillion in Debt
“Billions of Dollars are pouring into the coffers of the U.S.A.,” tweeted President Trump last month, “because of the Tariffs being charged to China.”
Is that more amusing than pathetic or vice versa?
After using tariffs to pay down debt, the US is running up against a deficit ceiling of $36.1 trillion, up from $21 trillion when he first proposed the idea.
And this is despite the fact that Biden kept intact all of Trump’s tariffs and added more.
Today, Trump wants to use tariffs to balance the budget.
On January 6, 2025 I asked How Much Revenue Can Trump Realistically Bring in From Tariffs?
The Tax foundation estimates a 2025-2034 dynamic revenue gain of about $233 billion per year if Trump does 20 percent tariffs across the board.
That’s a nifty $2.33 trillion over 10 years. Color me skeptical, but assume it’s true (ignoring the costs of doing so).
The Committee for a Responsible Federal Deficit estimates Trump’s proposed economic plan would increase additional borrowing by about 30 percent over the next decade, to a record 133 percent of Gross Domestic Product (GDP) by 2035 – nearly doubling the debt growth expected under current law.
Interest alone would cost an extra $1.3 trillion. I will cover more or this in detail, in a following post.
Republicans have a majority in Congress and the presidency. They could put a stop immediately to the decline of the USA by abolishing the Federal Reserve. But why dont they? Because they want the Federal Reserve to be able to print money to finance their massive deficit spending, which has resulted in a massive devaluation of the dollar, and multiple bubbles in single family homes, where people lever up on artificially cheap debt to hoard housing, looking for a quick profit or to be a landlord, making housing unnecessarily or prohibitively expensive for a lot of people doing the real hard work to provide for the country’s needs, which then drives up labor costs and then costs of services. People should be aware of that, as most aren’t when thinking about voting for the Republicans and Democrats because of all the mess they have and continue to make with their senseless and damaging economic policies. Voting Libertarian supports the policy most aligned to really stabilize the dollar and inflation.
Quite the screed. Do you feel better now? [ROTFLOL]
You clearly have no idea what purpose the FED fills.
Well they say to keep inflation moderate and sustain jobs. But I dont think printing money to spend wastefully and suppress rates is actually healthy for jobs. The cheap debt fuels a lot of unproductive malinvestment like gambling on RE and crypto and stock buybacks when people could use that for producing real goods and services here in the USA. Its a cause of a lot of problems like housing unaffordable even with spiking wages making people want to strike. If the Fed would let the market/real people have to buy the debt, instead of printing/debasing money to buy it, thet would act as a big restraint to deficit spending, because rates would have to rise higher to attract real peoples money, and those higher rates would then reduce consumer spending, which businesses dont want, so their would be pressure from businesses/donors on Congress to cut spending. So hopefully QT goes a lot further in draining dollars.
And they wouldnt have had to do QT if they hadnt printed the trillions in the first place. Now while its the greedy speculators fault if they are caught holding the bag, a lot of naive people whose intentions werent bad will get caught up in the bubbles popping, tricked by all the hype, and their lost time and productivity is a loss to society. Disappointing how some people seemingly dont care or even think its funny how the dollars value keeps being unnecessarily lowered. Its a shame how penny used to be a lot more valuable, now theyre getting rid of it and even immediately start saying the nickel should go too.
Forgot to mention two of the main issues now, the trade deficit and large fast immigrant increase. If housing wasnt so costly due to being artificially inflated, wages wouldnt have to be so high, so then more manufacturing could be done here and by Americans as one of the main excuses of companies doing foreign production is its too expensive to to do so here because of high labor costs and of course people thinking they are rich from bubble asset prices thinking they dont have to work.
Fortunately it’s the government(s) that go broke, not the country(s) and its resources. Everyone surviving will be happy or dead and have little or nothing except for the lucky few pigs running their animal farms doling out the goodies, as usual.
In an interview with the Associated Press published over the weekend, President Zelensky said he doesn’t know where most of the money the United States allocated under the Biden administration to Ukraine has gone.
“But when it’s said that Ukraine received $200 billion to support the army during the war – that’s not true. I don’t know where all that money went,” Zelensky admitted.
“President Zelensky said he doesn’t know where most of the money the United States allocated under the Biden administration to Ukraine has gone”.
What a surprise!
I bet the Pentagon can’t document where most of the HUNDREDS of BILLIONS $$$ they are gifted each year wind-up.
Both parties claim a huge mandate (falsely) after the presidential election, and do deeply foolish throw-aways for their pet constituencies. The weakening of Congress (the public’s fault) as a deliberative and decision making body throws it all to some fool president or other. No modern president has run a (normal, everyday, practical) business. It shows glaringly. Now we have one who knows sub-zero about government and has run a completely unusual, weird business.
Since it is politically impossible to tax people in the USA to pay for expenses, the tax will be things like (1) inflation, primarily, and (2) tariffs. I would only ask, who should do something about it? Answer: we, the public, through our government. But “we” prefer to live in cuckoo land.
Those EPA green grants are an easy cut.
I don’t think Musk will be allowed near the DOD.
That’s Trump’s baby.
Trump set Musk loose in the long-doomed Dept. of Education – that will keep the public entertained for a while.
Ever since former Congressman Al Ullman proposed a national sales tax back in 1980 and lost his re-election bid, Congress has stayed away from proposing a national sales tax (on goods) or a national VAT (on goods AND services). So a large and growing Federal national debt and large annual deficits do not surprise me. If one also considers the willingness of Congress to keep the US in its role of world policeman, it won’t surprise me when the US financial system finally collapses.
If SPX drops JP will cut rates and stay the course. Trumps gov will benefit from 4 sources: tariffs, higher income tax collection, smaller gov size and lower interest rates. Within a few years gov debt might drop below $30T if the Trump/Vance gov will be fully committed to cutting debt.
is it too late for yet another world war? doesn’t that fix all the old problems by creating new ones?
whatever shall we do?
lets get those numbers up boys, this crap aint gonna sell itself!!!
No it’s not too late. If Russia thought it was going to lose its naval base at Sevastopol in Crimea, it would launch nuclear weapons.
Trump wants Ukraine to pay back $500 billion RT. This is enough to get Ukraine to run to Russia. https://swentr.site/russia/612486-trump-ukraine-billions-rare-earth/
Ukraine signed a “land Lease” agreement. Ukraine is indebted to the US.
like the Brits. If they don’t pay they can go bk. That’s why the 1,000 years
British Empire collapsed in 1,000 days.
The British Empire wasn’t a 1000 years old and it’ didn’t collapse in 1000 days.
And once the Ukraine entity ceases to exist, so do its obligations.
PS: it’s lend lease.
You must be confusing the British Empire with Nazi Germany which was supposed to last 1,000 years but actually lasted less than 13 years.
you might want to brush up on the East India company, and the competitions between Dutch,French,Spanish, German and English business interests, for extra points add Portugal..
Trump has been fixing Biden’s sinkhole. SPX might test Aug low before moving up 1,000 points.
The sinkhole started with Bush 43, who pushed for two tax cuts even as he was launching two expensive wars in the Middle East.
Reading these comments makes me wonder how old the writers are.
I’m 65 and can clearly recall my grandmother in 1969 complaining about the price of tomatoes, gawd rest her soul, poor thing was convinced it was a sign that the END IS NEAR.
Grams worried sick about how little ratty’tatty muskie-musk, (her pet name for me), was going to live a full and eventful life like hers through the industrial age and great depression…
I pulled myself up out of her cynical diatribe and dazzled you with you know what rather than impress with facts.
The crowning victory of carpet baggers since time immemorial.
Grams told me what carpet baggers were and I knew right then I had a natural predilection to success as one.
You probably have got my drift by now if you are still reading.
Commentors here so far are wet behind the ears, green horns, need to put your worthless nose to the grindstone and keep a positive attitude that everything is going to be fine.
Now if the scientists are wrong and our planetary system gets sucked into a black hole because they are unable to predict this occurring, to date, then hug your loved ones and consider yourself fortunate to have witnessed the end of our world.
Sleep well comrades 🥱
“If there is a solution to a problem, there is no need to worry.
And if there is no solution, there is no need to worry”
— Dalai Lama
and what Mr. Lama failed to mention is, “Someone will find a way to profit from this, too..”
Yet another day in the fish barrel…
People don’t come here to be told everything is alright. They come here to find and talk about what is wrong and how to right it. If you prefer feel-good blogs then find one with cute puppies and kittens.
I thought this was the KutePuppens.and.kitterkatz blog. I had noticed a lack of cute pictures lately, thought it was just a dry spell.
oh well the world is going to the Katz and Dawgz they say.
I wonder how the Fed is coming on its Trillion Dollar Coin project. Will they put Trump on the front and Musk on the obverse side? You know they say “two heads are better than one!”
this could be a chance to provide a measurable scientific basis to evaluate this theorom. I know the fed Klownz, er I mean economists love a good theoritical debate. This could consume years of Fed Thought and perhaps save the nation by benign neglect on their part.
Please read for comprehension!
What is wrong; you are too young and therefore not wise.
To “right it”; be fortunate enough to grow old and curious enough to become wise.
Class adjourned.
Your grade for this exercise is an F.
The problem is not so much the increased debt. It could be a Godzillian. The problem is the interest payments and, more importantly, the buyers of the US Ponzi scheme. What happens next if the buyers stop buying and confidence falls to a level where buyers go away? Default.
And the US is not as bad as other countries. Europe is on a deathbed. The depression really got going when European banks closed, and sovereign debt defaulted. This is the problem with tariffs on the EU. They will kill the already slow economy of Europe, which won’t be able to buy imports from the US. That’s like throwing gas into an old dying man.
you see its gloomer, uncreative thinking like that, that causes problems.
Wall street’s best are working on this problem, they will create a Soveriegn Debt Fund, and issue bonds.
Wait Mr Guacamole, I hear you thinking, “Who would buy such a pile of crap?”
Thats where our Wall Street Dreamers come into the picture, fueled by a diet of pure greed and cocaine and the wrath of superiors, the gears in their little brains spin at nearly the speed of light.
Working on a way to sell the debt to the last financially stable segment of the market, the retirees, the social security sector, the boomers.
Paying 15% interest, and purchasable directly and electronically from social security payments, they raise the average SS payee’s income by 15% annually, thus assuring massive investment in the stock market, providing an ever higher DJIA and the Dubious Seven become the INCREDIBLE ONE THOUSAND. A rising tide lifts all boats and just sign here on the dotted line before this incredible offer expires…..
“What happens next if the buyers stop buying and confidence falls to a level where buyers go away? Default.”
Nope. Not even close to how it works. What happened in WWII when there weren’t enough buyers for the debt? The COVID years? Answer the federal reserve stepped in as buyer of last resort. Who are the biggest buyers of US debt? Answer: American banks. Why? Because they can earn a safe return on excess deposits. Where do some of these excess deposits come from? Answer: federal deficits as the government spends money into the economy. So the federal deficits creates the money used to buy the debt, just with banks skimming a profit.
People have been moaning about the “debt” since Ronald Reagan first cut taxes and blew out the deficit. Default and hyperinflation have been right around the corner for 25 years and yet it never quite happens. I honestly can’t believe people still don’t understand how financial system works after all these years.
Gold isn’t money. Debt is money. When you understand that, you’ll understand the economy, and believe me, Donald Trump understands that.
When they print money to “buy” the debt, it dilutes the value of the dollar and artificially suppresses rates, which fuels speculation and all kinds of malinvestment like people hoarding housing, too many people trying to be landlords, money bidding up stocks to bubble values, companies doing stock buybacks and then claiming they cant afford to pay American workers,, buying junk like crypto, all that bad investment means less good investment on US soil, making the trade deficit worse. Its overall bad for the economy and our countrys long term stability and our reputation.
If buyers stop buying, there is always the Federal Reserve to buy the bonds. I think that is what happened in Germany starting WWI. I don’t think Germany ever defaulted on its bonds during the Weimar years, but high inflation made German bonds virtually worthless by late 1923.
How about exploding costs for Medicare and Medicaid? Those costs have risen 60% during the last four years (2021-2025). Are Americans suddenly getting sicker? Is there a demographic wave of over-60 Americans? No. It turns out the explanation is that the 10 to 20 million illegal immigrants who crossed the border are handed $2,200 in cash, food stamps and a medical benefits card on arrival. In reference to illegal aliens, one doctor said, “Their first stop after getting this benefit envelope was either Walmart or the emergency room.” This “free” healthcare for illegals costs U.S. taxpayers in the tens of billions of dollars.
Yeah, job growth remains the greatest in the healthcare sector. Time for reforms like for Medicaid.
It’s not going to kick people to the curb, but it will reverse the trend as far as realizing productivity gains and more program effectiveness.
Biden’s 2023 deficit was $1.65 trillion and 2024 deficit was $1.9 trillion.
I hope Trump can reduce some spending so the 2025 deficit is no more than $1.9 trillion.
I was seriously considering renouncing my citizenship, moving to mexico, and sneaking across the border back into the USA, so I could get the massive migrant aid boost to my 401k. Made a few bad bets on that Biden Wind Energy project and those Rechargable Tropical Electric Eels. this green energy is so complicated…
anyway financial planning is important for older peoples and one must consider all angles and beware triggering a taxable event, like breathing or eating.
All Baby Boomers have reached age 60 and most are already old enough to qualify for Medicare (65+). Some who might have died at a younger age are now being kept alive thanks to the Medicare drug benefit. But illegal immigrants who have access to free medical benefits are helping to drive up costs for the rest of us.
Thats the fault of the Uniparty which includes the Republicans and Trump. That money wouldnt be there to hand out or push down interest rates if the Republicans and Trump didnt approve it as well. They have a majority in Congress now so they could move to make e-verify mandatory or abolish the Federal Reserve if they didnt want that stuff.
When is the last time they actually passed a budget and did not do a “continuing resolution”? This is totally out of control and nobody in Congress is worried about it.
I beleive Mr. Roosevelt (young teddy, not Frank the Crank) was is short pants when the last actual budget was passed. It was nearly a million dollars, and there was much clutching of pearls and decent ladies swooned whilst gentlemen cursed softly beneath their breath.
It was a dangerous time, the world seemed balanced upon a precipice and doom was surely predicted to soon arrive by pundits and newspapers alike.
A cigar soon cost 3 cents, and good and pure and gentle ladies, began showing their ankles in public. It was the worst of times, it was the best of times…..
“Outlays for net interest on the public debt increased by $37 billion (or 13 percent) primarily because the debt was larger than it was in the first four months of fiscal year 2024.”
Anyone else catch this?
The claim is that interest payments increased by 13% because debt was larger. Note that’s just in 4 months time (1/3 of a year). It would mean 2024 debt was 13% larger than 2023 debt (assuming rates were the same). In reality the entire years debt for 2024 went from 33 to 35 trillion which is just over 9% FOR THE YEAR or roughly 3% in 4 months. The other 10% must be due to rising rates on newly issued / rolled over debt.
I bet in 2025 that interest payments continue to rise by 13% or more because it’s another year of higher rates that the government has to pay on newly issued / rolled over debt. So expect interest payments to start eating up a LOT more percentage wise of the total debt increase.
The 10 Year Treasury is usually 1.5% above the annual inflation rate (and the 30 Yr mortgage rate is typically 1.5% greater than the 10 Year Treasury).
But with banks like Schwab paying 4.5% for a 1 year less CD, its hard to get investors to want to buy the 10 Year Treasury.
That is why the 10 Year Treasury is at 4.5% in order to attract enough demand in the bond market.
And Fed Funds rate is around 4.35% (compared to annual inflation or Personal Consumption Expenditures (PCE) of 2.6%) which means the prime rate for lending is around 7.25%.
As the Wolfman at Wolf Street website has said, a 7% rate for a 30 yr mortgage is the historic norm.
We just have to get readjusted with this since interest rates were so low from 2009 to 2022.
Hopefully the air will slowly but steadily be let out of the housing bubble as it generally has since early 2022.
Good points. I would think because of inflation, the debt should go up at least the current rate of inflation. Minimum of 3%.
I always wonder if things are not what they seem to be when percentages are used as a barometer or measure. There needs to be a baseline and background.
Is a 0.7% increase in tax receipts (nominal) consistent with real GDP growth of 2.8%?!
It’s also odd that no one mentions the accelerating deficit as a factor in rising long bond rates.
That is kind of open-ended. What are the percentage breakouts?
The COLA was 2.5%. As to number of beneficiaries this year is about the peak rate of increase. About the middle of next year the number of boomers reaching FRA will begin dropping off.
Much motion and commotion for nothing. More for show than for go. The clown show is only happy if it can see itself on TV. Mirror on the wall who is the smartest of them all. If you want to solve the problem, both need to happen: higher taxes and less spending.
The economy is holding on by a thread. Sooner than later, the thread will break.
Time for reforms not only with federal bureaus like USAID and Department of Education, but also with entitlements.
They are going to have to a “means test” for social security whereas higher earners are not going to receive 100% of their social security entitlement. Also reforms to Medicaid are needed.
We need to eliminate Medicaid. You can get free healthcare for a life threatening emergency at the ER. No free follow up care. More people will work if we stop giving them free handouts ( free healthcare, food stamps, Wic, housing)
The hospital always sends the bill later, even if the patient does in the ER.
Not very many pay the bill. But they pay by taking a hit to their credit.
You can ask the hospital to write the bill off to charity – they often will.
Barry Knapp quote: This (Trump’s) economic team has all of the right ideas. End of quote — I consider Barry Knapp a smart guy, though I can’t quite shake Frank’s belief that we are screwed. We have to deal with the hand we’ve been dealt by the criminal, anti-American prior administration that made a disgusting, thankfully futile attempt to buy votes on an industrial scale. Life is often just a constant struggle to overcome the bad actions of bad people (who, to be charitable, may be so senile that they didn’t know that they’re being led by the hand in that direction — nah, Joe’s bad).
Killing the penny will fix it, you just watch!
That Gaza seaside resort should be a big moneymaker too.
It won’t be a forever money suck, as it would be with the Palestinian continued occupation and their hands always begging for more UN welfare and handouts.
Israel/Palestine will always be a massive black hole, devouring massive amounts of American wealth and debt, for as long as the USA exists.
Israel is the largest recipient of welfare and handout from the US.
In the past couple of years, it has been Ukraine.
I’m hoping he eliminates gas priced at xxx.9/gal next!
The economy is pretty good at least on paper, and inflation keeps running hotter than we want, so if we had half a brain in our collective heads we’d raise taxes some and maybe lay off on expanding the military more, at least. If we were really serious we could do a variety of stuff with SS (eliminate the tax cap, reduce benefits a little, let the retirement age creep up, etc, etc) and Medicare (mostly the same) and actually reduce military spending some at the same time.
Instead we get more bloat but some performative (and constitutional crisis creating, probably) axing of DEI peanuts along with all our cancer research because what have the eggheads ever done for us. Lovely.
And look at Us go…
The whole country at odds over attempts to save some ill-spent $’s.
Look how easy it is to see how We got Ourselves into this mess.
“We?” You imply that you and I had some say in the matter.
People do have a say. They could vote Libertarian, which is about paying down debt and balanced budgets, but very few do because most are uninformed about the problems we face.
No matter how you slice it, we’re fucked!