US budget gap hits $1.1T record in first five months of fiscal year

The US budget deficit continued to swell in February, pushing the shortfall to $1.15 trillion over the first five months of the fiscal year, with the increasing cost of Medicare and servicing government debt contributing to the widening.

For February alone, the deficit grew to $307 billion, the Treasury Department said in a release Wednesday. The gap for the fiscal year, which began Oct. 1, is 17% larger than the prior year after adjusting for differences in the calendar.

The continued widening in the deficit threatens to complicate President Donald Trump’s efforts to extend, and expand upon, his 2017 tax-cut package, much of which is set to expire at the end of this year. Fiscal hawks among congressional Republicans may press for further offsetting steps to ensure the fiscal trajectory doesn’t worsen yet further. Supporters of the tax cuts have emphasized the danger to economic growth of not extending them.

Asked whether the Elon Musk-led initiative to pare back federal spending is having an impact on the budget numbers, an agency official referred reporters to DOGE. The official also said that there aren’t many spending categories that stand out as having significant decreases in Wednesday’s report.

The official, briefing on condition of anonymity, also said that the 10% surtax on Chinese imports imposed last month had yet to come into play as of the February figures.

Medicare, Debt Costs

For the fiscal year to date, revenues came in at $1.89 trillion, up an adjusted 2% on 2024. Outlays totaled $3.04 trillion, and were up 7% after accounting for calendar differences.

Among the categories showing the biggest increases in spending was the Medicare program, where costs for the past five months climbed by $124 billion from the prior fiscal year, to $518 billion. Interest on the public debt increased by $45 billion to $478 billion. Social Security outlays rose by $49 billion to $663 billion.