According to the Treasury Department’s monthly report on spending and tax revenue, the US Federal government is still very much on track to finish the fiscal year with more than two trillion dollars in new debt. Nor is there any sign so far of any significant change in spending patterns since Donald Trump was sworn in in late January.
The US is now six months into its fiscal year (which began October 1) and the total federal deficit for the fiscal year is now $1.3 trillion, which is an increase of 23 percent over the same period of last year. At this pace the total federal deficit for the fiscal year is likely to come in around $2.6 trillion.
These enormous deficits are driven largely by enormous amounts of federal spending, and during the first six months of this fiscal year, federal spending increased 9.7 percent over the same period last year, rising from $3.3 trillion to $3.6 trillion.
What does this mean in terms of the current administration? The administration’s supporters, of course, are likely to point to only the figures for February and March, searching for some sign that federal spending has changed significantly since the Trump administration took over.
By this measure, the size of the deficit did decline. For the two-month period of February and March (the first two full months of the second Trump term) the federal deficit fell, year over year, to $467 billion. That’s down from the $532 billion deficit recorded during the same two-month period of last year. The decline in the deficit was not due to any significant change in spending, however. It was due to rising tax revenues. In other words, the source of US revenue during the period shifted from future taxation (i.e., deficit spending inflicted on taxpayers via loans) to current taxation (present tax receipts). This just means that the federal government was more successful at sucking wealth and income out of the economy via taxation during the period.
The statistic that really matters—federal spending—fell by only 0.4 percent for the first two months of the Trump term, compared to the same period of the previous year. That is, federal spending during February and March this year totaled $1.131 trillion. Total spending for the same period last year was $1.136 trillion.
So far, there is no end in sight to these immense spending totals. Although the Trump administration’s Department of Government Efficiency, headed by Elon Musk, initially claimed it could cut a trillion dollars from federal spending, that number was recently revised downward by 85 percent to $150 billion.
Moreover, these claims of budget cutting are now being contradicted by new announcements of Trump’s plans to increase discretionary spending while not touching nondiscretionary spending.
It’s going to take a lot more than some trimming around the edges to change the federal government’s current trajectory into continued $2-trillion-plus annual deficits. So far, neither the Trump administration nor the GOP in Congress has shown it has any plans for significant cuts.
