US budget deficit hits $1.3 trn in six months, second highest on record

The US budget deficit has grown to more than $1.3 trillion in the first half of the 2025 fiscal year the second highest six-month deficit on record, according to Treasury Department data.

The deficit for October through March spans the administrations of President Joe Biden and President Donald Trump. The previous high in the four decades of recordkeeping was $1.7 trillion in the first half of fiscal year 2021, when the government was tackling the Covid-19 pandemic, said the data released Thursday.

A Treasury official who spoke on the condition of anonymity to preview the data said the increased spending was in part due to a mix of expenditures, including cost of living increases to Social Security payouts, higher Medicare and Medicaid costs, increased disaster assistance to the Federal Emergency Management Agency and Defense Department spending.

The widening deficit, which occurs when spending exceeds the amount of money being raised, comes as the Trump administration has touted a plan to reduce waste and spending in the federal government through Elon Musk's Department of Government Efficiency, also known as DOGE.

It also comes as House Republicans narrowly approved their budget framework Thursday, which advances $4.5 trillion in tax cuts and seeks at least $1.5 trillion in cuts to federal programs and services.

DOGE has recommended plans to lay off a large portion of the 2.4 million members of the civilian federal workforce, eliminate entire agencies, including the Education Department, and cut other government services.

The new Treasury Department data shows a deficit of $1.307 trillion for October through March, the first six months of the fiscal year 2025. And spending is $139 billion more in the first three months of 2025 compared to the same period last year, with borrowing over that period $41 billion higher.

In the Oval Office on Thursday, Musk said DOGE expected to achieve $150 billion in savings during the next fiscal year by reducing waste and fraud, which he described as very common. That's much lower than his previous target of cutting $1 trillion a number he used last month in a Fox News interview.

Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, said Thursday, The numbers are undeniable. We are racking up debt at an alarming pace, and it's unlikely to end any time soon. In fact, lawmakers seem hellbent on adding to that sum with trillions of unpaid-for tax cuts and spending increases.

We need to correct the unsustainable course we are on and start focusing on fixing our nation's finances before it is too late, MacGuineas said.

Tensions remain within the Republican conference about the scope of the proposed tax and spending cuts. Some want more in tax cuts than what is in the blueprint, while others want steeper spending cuts.

Treasury Secretary Scott Bessent has frequently spoken about the need to tamp down on spending.

He told Bloomberg Television earlier this month that the nation would creep closer to hitting the statutory debt ceiling on the so-called X-date, as soon as the early summer. "We are going to go onto the warning track sometime in May or June, Bessent said.