Hoover Institution senior fellow Victor Davis Hanson discusses the mounting pressure on the Federal Reserve to cut interest rates in September on ‘Kudlow.’
The U.S. federal government’s annual budget deficit has widened by $109 billion so far this fiscal year despite an influx of tariff revenue to the government’s coffers.
The nonpartisan Congressional Budget Office (CBO) on Friday released its monthly budget update for July, which found that the federal budget deficit totaled $1.6 trillion in the first 10 months of fiscal year 2025. That figure is $109 billion higher than it was for the same period in FY2024.
Overall, federal tax receipts were up $263 billion, or 6%, while spending outpaced that gain, rising by $372 billion, or 7%, in the first 10 months of FY2025.
Much of the rise in federal tax revenue was driven by the Trump administration’s tariffs, which are taxes on imported goods that the White House has increased markedly on U.S. trading partners over the course of this year.
NATIONAL DEBT TRACKER: AMERICAN TAXPAYERS (YOU) ARE NOW ON THE HOOK FOR $36,950,459,859,111.56 AS OF 8/7/25
The federal budget deficit for the first 10 months of fiscal 2025 is $109 billion wider than it was at the same time a year ago. (iStock / iStock)
The CBO said customs duties collected were up by $70 billion, or 112%, so far in FY2025 compared with the same period in the prior year as a result of the higher tariffs.
Individual income and payroll tax receipts were up $214 billion, or 6%, from a year ago in the first 10 months of this fiscal year.
Corporate income taxes are down $27 billion, or 7%, compared with the same 10-month period in FY2024.
RAY DALIO WARNS OF LOOMING FISCAL CRISIS IF US DOESN’T ADDRESS DEFICIT SPENDING: ‘ECONOMIC HEART ATTACK’
Tariffs are taxes on imported goods paid by the importer, who typically passes some or all of the higher cost on to consumers through higher prices. (Qian Weizhong/VCG via Getty Images / Getty Images)
Federal spending is up $372 billion in the first 10 months of FY2025 compared with last year, much of which is due to higher outlays on mandatory spending programs.
Spending on Social Security benefits increased by $102 billion, or 8%, from the same period last year.
That increase was due to higher average benefits due to the annual cost-of-living-adjustment (COLA) that boosts benefit amounts to account for inflation and the rising number of enrolled beneficiaries as America’s population ages.
REPUBLICANS DEFY FISCAL CRITICS TO PUSH THROUGH TRUMP’S SIGNATURE ‘BEAUTIFUL’ TAX CUTS
Medicare spending is $58 billion higher in FY2025 so far compared with last year due to a greater number of enrollees and higher payment rates for services. Medicaid spending was up $47 billion from a year ago due to rising costs per enrollee.
The cost of servicing America’s nearly $37 trillion national debt also increased by $60 billion, or 8%, in the first 10 months of FY2025 compared to the prior year. That’s due to the national debt being larger than it was in the same period in FY2024.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
For the month of July, the deficit amounted to $289 billion, $45 billion more than in July 2024, as spending increased by more than the rise in tax collections.
The CBO also noted that the surplus in June 2025 was $27 billion, or $1 billion higher than the initial estimate a month ago.
