Posted on 08/18/2025 3:43:38 PM PDT by Angelino97
Uncle Sam is cashing in on tariff revenue, but it's not keeping up with his out-of-control spending habits.
Despite triple the amount of tariff income, the July budget deficit surged to $294.14 billion, 19 percent higher than a year ago, according to the Monthly Treasury Statement.
Meanwhile, the national debt officially eclipsed $37 trillion on Aug. 11.
The fiscal 2025 budget deficit stands at $1.63 trillion with two months remaining.
Federal revenues were up about 2 percent year-on-year in July thanks to a surge in tariff receipts. The government collected $22.7 billion in customs receipts. That compares to $7.1 billion in July '24.
Through the first 10 months of fiscal 2025, the U.S. government brought in $135.7 billion in customs duties. That's up $73 billion, or 116 percent, from the same period in fiscal '24.
In total, the federal government has collected $4.35 trillion so far in fiscal 2025. That's 6.6 percent higher than through the same period last year.
However, the healthy boost in income isn't keeping pace with the incessant government spending.
The Trump administration blew through $629.64 billion in July. That was 10 percent higher than last year.
So far in fiscal 2025, the federal government has spent $5.98 trillion, a 6.8 percent increase over the same period last year.
There is no indication that spending will slow down any time soon. The Big Beautiful Bill "cut" some spending but increased it in other areas. Furthermore, those "cuts" were from projected spending increases. Actual spending will still go up, just not as fast as originally planned. The bottom line is that even with the Big Beautiful Bill, spending will increase on an absolute basis.
This is par for the course.
You might recall that President Biden promised that the [pretend] spending cuts would save "hundreds of billions" with the debt ceiling deal (aka the [misnamed] Fiscal Responsibility Act).
That never happened.
Supporters of the Big Beautiful Bill expect economic growth stimulated by tax cuts to boost revenue and narrow the deficit. However, history casts significant doubt on this claim.
The ugly truth is the government isn't committed to cutting spending in any meaningful way, and it always finds new reasons to spend even more, whether for "crises" at home or wars overseas.
The Interest Problem
The federal government is being increasingly burdened by its skyrocketing interest expense. This is one of the reasons President Trump and others in the administration are pressuring the Federal Reserve to slash interest rates.
Interest on the national debt cost $91.9 billion in July. That brought the total interest expense for the fiscal year to $1.01 trillion, up 6 percent over the same period in 2024.
Net interest (interest expense – interest receipts) stands at $841 billion through the first 10 months of this fiscal year.
So far, in fiscal 2025, the federal government has spent more on interest on the debt than it has on national defense ($758 billion) or Medicare ($823 billion). The only higher spending category is Social Security ($1.31 trillion).
Uncle Sam paid $1.13 trillion in interest expenses in fiscal 2024. It was the first time interest expense had ever eclipsed $1 trillion. We're close to that number already, with two months remaining in the fiscal year.
Much of the debt currently on the books was financed at very low rates before the Federal Reserve started its hiking cycle. Every month, some of that super-low-yielding paper matures and must be replaced by bonds yielding much higher rates. And even after the Federal Reserve cut rates, Treasury yields have pushed upward as demand for U.S. debt sags.
Ramifications
Some people claim that borrowing, spending, and big national debts don't matter.
They do.
According to the national debt clock, the current debt level represents 123.3 percent of the GDP. Studies have shown a debt-to-GDP ratio of over 90 percent retards economic growth by about 30 percent.
And as the Bipartisan Policy Center points out, the growing national debt and the mounting fiscal irresponsibility undermine the dollar:
"Confidence in U.S. creditworthiness may be undermined by a rapidly deteriorating fiscal situation, an increasing concern with federal debt set to grow substantially in the coming years."
This could lead to lower economic growth, higher unemployment, and less investment wealth.
Lack of confidence in the U.S. fiscal situation could also lower demand for U.S. debt. This would force interest rates on U.S. Treasuries even higher to attract investors, exacerbating the interest payment problem. As already mentioned, we saw a big spike in Treasury yields despite Fed rate cuts. Yields increased again in the wake of the trade war. There is growing evidence that Treasuries are already losing their safe-haven appeal.
Biden ran the debt higher at a dizzying pace, but to be fair, this isn't just a Biden problem. Every president since Calvin Coolidge has left the U.S. with a bigger national debt than when he took office.
It's going to take more than DOGE rooting out waste to get the borrowing and spending under control. Even if the Trump administration manages to slash discretionary outlays as promised, that only accounts for 27 percent of total spending. The vast majority is for entitlements, and there is little political will to take the scissors to Social Security or Medicare.
And the sad fact is that, given the political incentives, people in power will always kick the debt can down the road. It is a long-term problem that will require painful measures to fix. Politicians don't want to create pain. That's a quick path out of office. So, they will punt the debt problem and spend more to make constituents happy.
This is all well and good, but the problem with playing kick the can down the road is that you eventually run out of road.
Didn’t I read the opposite a few days ago??
As long as Congress refuses to stop using baseline budgeting, we will not get control of our budgets.
Not too long ago, that figure would have been considered extremely high for an entire year. Goes to show how far the dollar has fallen. That math has us at around $3 trillion per year, beyond unsustainable.
IMO it's the most serious and growing threat to our well being, yet nobody in DC or our media seems concerned. Doesn't seem to be on the radar of the(very spendy) Trump admin.
Yes, someone posted an article saying that Trump’s tariffs would reduce the debt.
“IMO it’s the most serious and growing threat to our well being, yet nobody in DC or our media seems concerned. “
I guess you missed the BBB projected surpluses.
The administration is “hoping” for a rate cut. With the PPI still hot, rates are not likely to drop as quickly or as much as Trump wants.
But, Congress makes the budget. Most of this is on them.
Note: FY2025 began October 1, 2024, so...
Biden was the profligate spender through noon on January 20, 2025.
"Surpluses"... lol.
You're right, I totally missed that. So will everyone else.
Not really. Unless Congress can pass a VETO-proof budget, the President plays a big role in shaping the budget
I remember the budget battle in latter 1990s. Clinton wanted more spending, so he kept refusing to sign Gringrich's smaller budget. The government then "shut down."
Clinton blamed the shut down on Congress, because "They won't send me a budget I can sign."
That talking point spread. I remember people on the news blaming Gingrich for the shut down because "He won't send the President a budget that he can sign."
Gingirich blinked, and Clinton got the budget he wanted.
Trump can do the same if he wants. Presidents have a lot of power over the budget.
Pretty sure the vast majority of the spending going on now was approved by congress under Biden.
If spending is up, it ain’t Trump.
“You’re right, I totally missed that. So will everyone else.”
You have no faith in Trump?
It is in the interest of Congress to control spending.
It is not in the interest of congressmen.
If you're farming or trying to build anything, input costs - all costs really, except fuel - are just stupid right now.
Yep mostly Congress' fault, but it's past the point of fixing at this point anyway, even if they ever tried to cut spending, which they will never do.
So we'll fix this the hard way when our mass of largesse hits the fixed object of reality. Not sure when, or how it'll look, but it will be bad.
Huge increases in Socialist Security, Medicare, and the Department of Education (student loans) are the culprits.
The first two are automatic spending because of prior Congressional decisions.(Which is ridiculous)
The latter is the price paid for a continuation of the college industrial complex.
If spending is up, it ain’t Trump.
************
This is still the Biden budget.
Free Republic Trump haters don’t care..... they’re playing an angle.
Sooner or later our debt collectors are going to come a calling for us to pay them back.
Anyway you slice and dice it…the US is bankrupt
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