The U.S. budget deficit has exceeded $1 trillion just five months into fiscal 2025, marking a record shortfall for the period, according to the Treasury Department. February’s deficit alone totaled $307 billion, nearly 2.5 times January’s figure and 3.7% higher than a year earlier.
Government revenue failed to keep pace with spending, despite a slight monthly decline in expenditures. Interest payments on the national debt reached $396 billion for the fiscal year to date, trailing only defense, health, Social Security, and Medicare in costs.
The deficit grew sharply in the final years of former President Joe Biden’s term, rising from $1.38 trillion to $1.83 trillion. President Donald Trump has made deficit reduction a priority, launching the Department of Government Efficiency, led by Elon Musk, to cut costs. However, Treasury officials said it is too early to gauge the impact of these efforts.
Trump is also seeking to extend the Tax Cuts and Jobs Act, a move he claims will spur economic growth. Analysts estimate that renewing the tax cuts would add $3.3 trillion to the deficit over the next decade.
Meanwhile, the February deficit came in worse than forecast, with the actual shortfall of $307 billion exceeding the expected $302.5 billion. The sharp rise from January’s $129 billion deficit raises concerns over government spending trends and potential downward pressure on the U.S. dollar.
