Widened US budget gap reaches $109 billion compared to last year, triggered by increased tariff earnings
The U.S. federal government's annual budget deficit for the first 10 months of fiscal 2025 has widened by $109 billion compared to the same period last year, reaching a staggering $1.6 trillion. This is despite the Trump administration's efforts to reduce the deficit, primarily through tariffs on imports, promoting economic growth, and government efficiency initiatives such as the creation of the Department of Government Efficiency (DOGE).
Spending on Medicare is $58 billion higher in FY2025 so far compared with last year, while Medicaid spending has increased by $47 billion. The cost of servicing America's nearly $37 trillion national debt has also risen by $60 billion in the same period.
Federal spending is up $372 billion in the first 10 months of FY2025 compared with last year. However, individual income and payroll tax receipts have increased by $214 billion, and customs duties collected are up by $70 billion due to higher tariffs so far in FY2025.
The Trump administration's tariffs are a major factor driving the rise in federal tax revenue. For the month of July, the deficit amounted to $289 billion, $45 billion more than in July 2024. Spending on Social Security benefits increased by $102 billion, or 8%, from the same period last year.
Despite these efforts, the impact on the deficit and national debt was limited and controversial. Tariff revenues were projected to be only a fraction of the scale of deficits, unable to fully offset large deficits and new spending bills signed into law. The national debt exceeded $37 trillion in 2025, reaching the milestone earlier than expected, and was growing rapidly—adding roughly $1 trillion every five months.
While some interest payments on the debt slowed during Trump’s second term, increased spending bills threatened to reverse this progress. The administration's fiscal policies, including permanent extensions of some tax cuts from the 2017 Tax Cuts and Jobs Act and new deductions, generally maintained lower tax rates rather than increasing them.
As of August 7, 2025, the national debt stands at $36,950,459,859,111.56. The widening budget deficit and growing national debt indicate that the measures taken by the Trump administration were insufficient to curb rising borrowing and debt levels.
- The Trump administration's efforts to reduce the federal budget deficit, through tariffs on imports, promoting economic growth, and government efficiency initiatives, have been overshadowed by an increase in spending.
- Inflation, as indicated by the rising cost of servicing America's nearly $37 trillion national debt, has become a concern, with the cost rising by $60 billion in the first 10 months of FY2025.
- Despite the increase in individual income and payroll tax receipts and customs duties, largely due to higher tariffs, the U.S. federal government's annual budget deficit for the first 10 months of FY2025 has reached a record $1.6 trillion.
- The increased spending on Medicare, Medicaid, and Social Security benefits, coupled with new spending bills, has contribute significantly to the widening budget deficit and growing national debt.
- The general-news today is filled with discussions about the Trump administration's fiscal policies and their impact on the economy, trade, and politics, with rising concerns about the sustainability of the current borrowing and debt levels.
