The 12-month rolling deficit topped $2 trillion. The data show the U.S. government is still borrowing ‘at an alarming rate,’ said one analyst.
According to new Treasury Department data, the U.S. government registered a $840 billion budget deficit in the first four months of fiscal year 2025, up 58 percent from the previous year.
In January, the federal government announced a $129 billion shortfall, significantly higher than the $21.9 billion it had logged in the same month last year.
The 12-month rolling deficit over the past year is about $2.1 trillion.
Last month’s budget gap was higher than the consensus forecast of $88.1 billion, fueled by calendar adjustments in benefit payments.
Tax receipts rose nearly 8 percent from a year ago, totaling $513.294 billion.
Total outlays climbed about 29 percent year over year, reaching $642 billion. The largest spending items were Medicare ($135 billion), Social Security ($128 billion), and net interest payments ($81 billion).
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In the first third of the fiscal year, net interest payments have already increased to $322 billion, roughly in line with defense spending and higher than a plethora of other federal programs.
The Congressional Budget Office (CBO) reported that the timing of tax receipts and expenditures influenced the budget deficit, increasing the gap slightly during the initial four months of the fiscal year from a year ago.
“Outlays in the first four months of 2025 rose, on net, because payments due on February 1, 2025, a Saturday, were made in January,” the nonpartisan budget watchdog said. “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.”
The latest numbers show that the U.S. government is still borrowing “at an alarming rate,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, an independent policy organization.
“All of this borrowing is resulting in real consequences. Interest payments on the debt are headed towards $1 trillion annually, and the national debt will pass its World War II-era record in just four years,” MacGuineas said in a statement.
“With policymakers considering fiscal policy with high price tags this year–such as tax [cut] extensions, defense spending increases, and other priorities—we need to commit to no new debt and start reducing deficits as part of any new legislation.”
The national debt presently sits at around $36.2 trillion.
House Budget Resolution
House Republicans released a budget resolution on Feb. 12 calling for $4.5 trillion in tax cuts and $2 trillion in spending cuts.
The resolution would increase the debt ceiling by $4 trillion.
House Speaker Mike Johnson (R-La.) says the budgetary framework is the first step in “delivering President Trump’s America First agenda.”
“With nearly every House Republican directly engaged in this deliberative process, this resolution reflects our collective commitment to enacting the president’s full agenda—not just a part of it,” Johnson said in a statement.
House Speaker Mike Johnson speaks to reporters before meeting with Elon Musk, CEO of SpaceX, and biotech entrepreneur Vivek Ramaswamy in Congress on Dec. 5. Madalina Vasiliu/The Epoch Times
The House Budget Committee will begin considering the blueprint on Feb. 13.
Researchers at the Committee for a Responsible Federal Budget stated that the budget resolution generates $4 trillion of new debt, presents “overly aggressive” economic projections, and potentially hides as much as $6 trillion of debt over 10 years.
“With the national debt headed toward record levels in just four years, interest costs on the national debt surging, and the impending insolvency of several federal trust funds, it would be a mistake to make our fiscal situation worse,” the group said in a report.
Federal Reserve Chair Jerome Powell appeared before the House Financial Services Committee and stressed concerns about the U.S. government’s fiscal health, calling the debt path “unsustainable.”
In January, the CBO published its 2025-2035 budget and economic outlook, concluding that the federal debt will rise to 118 percent of GDP by the end of 2035.
Cumulative tax revenues and outlays are projected to reach $67.548 trillion and $89.306 trillion, respectively. Mandatory expenses, such as Social Security, Medicare, and interest, account for approximately 80 percent of the spending in this budget window.
This year, the federal deficit is projected to be nearly $2 trillion.
Speaking in the Oval Office alongside President Donald Trump on Feb. 11, billionaire Elon Musk, who is leading the cost-cutting advisory commission Department of Government Efficiency, said he believes the budget gap could be halved.
“With the support of the president, we can cut the budget deficit in half—from $2 trillion to $1 trillion,” Musk told reporters.
