The federal government’s budget deficit has grown by more than $300 billion in the first five months of fiscal year 2025, according to the latest data.
The Treasury Department’s latest monthly treasury statement showed that February’s monthly deficit was $307 billion – up from $128 billion in January. That figure is also about $10.7 billion higher than in February 2024.
Since fiscal year 2025 began on Oct. 1, the federal budget deficit has totaled a new record of $1.146 trillion, according to Treasury data. Compared with the first five months of fiscal year 2024, this year’s budget deficit is tracking more than $318 billion larger.
The nonpartisan Congressional Budget Office (CBO) released an analysis that broke down the changes in federal spending and tax revenue, which found that the former far outpaced the latter.
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Federal spending in the first five months of fiscal year 2025 was 13% higher than the prior year, while tax receipts were 2% higher. Spending increased by $356 billion in that period when compared with a year ago, with notable increases in several categories.
The three largest mandatory spending programs saw their spending rise by a collective $73 billion, or 6%, in the first five months of fiscal year 2025.
Social Security spending was up $38 billion because of a higher cost-of-living adjustment (COLA) and a rise in the number of beneficiaries. Medicare spending was up $20 billion because of increased enrollment and payment rates, while Medicaid spending increased $15 billion due to rising costs per enrollee.
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Expenses related to paying the net interest on the national debt increased by $44 billion, or 12%, because the debt is larger than it was a year ago.
Department of Defense spending was up $27 billion, or 8%, with most of the increases due to operations, maintenance and procurement.
Outlays for certain refundable tax credits rose by $26 billion, or 29%, which the CBO attributed primarily to increased enrollment in health insurance marketplaces under the Affordable Care Act, also known as ObamaCare.
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The Environmental Protection Agency increased its spending by $22 billion, with the majority of that attributed to spending in November and December as the agency paid out $20 billion in grants under a program established by the Biden administration’s 2022 reconciliation bill. The grants are for clean technologies, energy-efficiency projects in disadvantaged communities, as well as solar projects in low-income communities.
Spending at the Department of Veterans Affairs (VA) rose by $22 billion, or 16%, because more people utilized veterans’ benefits and spending per beneficiary rose.
Homeland Security’s spending increased by $16 billion, or 45%, because of its response to Hurricanes Helene and Milton.
On the revenue side, total tax receipts were up $37 billion, or 2%, in the first five months of fiscal year 2025.
As of January 2025, the CBO projected that the federal government will run a $1.9 trillion deficit in fiscal year 2025 – the same amount as the fiscal year 2024 deficit.
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