The United States federal government has reported a significant increase in its budget deficit for the first five months of fiscal year 2025. According to recent Treasury Department data, February alone saw a deficit of $307 billion, surpassing January's figure of $128 billion. Since October 1, the start of fiscal year 2025, the total federal budget deficit has reached an unprecedented $1.146 trillion. This marks a rise of over $300 billion compared to the same period in fiscal year 2024. Experts attribute this surge to increased federal spending and relatively stagnant tax revenue growth.
During the initial months of fiscal year 2025, federal expenditures have risen by 13% compared to the previous year, while tax receipts only increased by 2%. Notably, several major categories experienced substantial spending hikes. For instance, Social Security outlays grew by $38 billion due to a higher cost-of-living adjustment and more beneficiaries. Medicare spending also rose by $20 billion because of increased enrollment and payment rates, and Medicaid spending climbed by $15 billion due to rising costs per enrollee.
In addition to these programs, expenses related to paying the net interest on the national debt increased by $44 billion, or 12%, reflecting a larger overall debt burden. Defense spending was up $27 billion, largely attributed to operations, maintenance, and procurement. The Environmental Protection Agency (EPA) boosted its spending by $22 billion, primarily through grants issued late in 2024 under a Biden administration initiative promoting clean technologies and energy efficiency.
Spending at the Department of Veterans Affairs rose by $22 billion, or 16%, as more individuals utilized veterans' benefits. Homeland Security's expenditures surged by $16 billion, or 45%, due to hurricane response efforts. Meanwhile, total tax receipts during the first five months of fiscal year 2025 were only $37 billion, or 2%, higher than the prior year.
The Congressional Budget Office projects that the federal government will face a $1.9 trillion deficit in fiscal year 2025, matching the shortfall from fiscal year 2024. These figures highlight the pressing need for policymakers to address both spending increases and revenue generation strategies. As taxpayers grapple with the implications of such deficits, discussions about potential reforms continue to gain momentum.