Prime Highlights:
The U.S. budget deficit exceeded $1 trillion in February 2025, marking a record high for the fiscal year.
U.S. government receipts and expenditures set new monthly records.
Key background:
The U.S. federal budget deficit surged past $1 trillion for the first time in the early months of fiscal year 2025, marking a record high. For February, the deficit reached over $307 billion, nearly 2.5 times the amount recorded in January and 3.7% higher than the same month in 2024. The latest data, released by the U.S. Treasury Department, underscores the widening fiscal gap despite a slight reduction in government spending on a month-to-month basis.
Through the first five months of the fiscal year, the deficit has totaled approximately $1.15 trillion, an increase of $318 billion compared to the same period in 2024. This represents a 38% rise in the deficit, setting a new record for the year-to-date period. Both receipts and expenditures hit new monthly records, with the cost of financing the national debt reaching $74 billion for February. While the net interest payment on the $36.2 trillion national debt edged lower from the previous month, year-to-date interest payments had risen to $396 billion. This is second only to spending on defense and health, with Social Security and Medicare being the largest contributors to the overall budget.
The current fiscal situation follows a similar pattern observed during former President Joe Biden’s tenure, with deficits swelling in the final years of his administration, from $1.38 trillion to $1.83 trillion. In response to the growing fiscal challenges, President Donald Trump has focused on reducing government inefficiency. His administration introduced the Department of Government Efficiency (DOGE), led by Elon Musk, which has pursued cost-cutting measures, including job reductions and early retirement incentives. However, a Treasury spokesperson noted that there has been no significant impact from these efforts so far.
At the same time, President Trump has advocated for extending the Tax Cuts and Jobs Act from his first term. While he has emphasized the potential economic growth from these tax cuts, think tanks have warned that extending the policy could add an estimated $3.3 trillion to the deficit over the next decade.
