During the first half of FY2025, the U.S. government ran the second largest semi-annual budget deficit in history.

The March budget deficit of $160.53 billion brought the total deficit for the first half of the fiscal year to $1.31 trillion, according to the latest Treasury Department release. The only larger budget deficit in a six-month period was $1.7 trillion in the first half of fiscal 2021, when the economy was at a standstill and the government was prioritizing the release of funds to deal with the pandemic.

During the first six months of FY2025, the U.S. Treasury collected $2.26 trillion. This was slightly higher than the $2.19 trillion collected during the first six months of FY2024.

However, according to a Treasury Department official, the 2024 revenue figure was inflated due to 2023 deferred tax payments related to natural disasters.

The real problem is on the expenditure side. 

The Trump administration squandered another $528.17 billion last month. This brought cumulative spending for the fiscal year to $3.57 trillion. This represents a 9.8% increase in spending over the same period in 2024.

Spending increased by $139 billion during the first quarter of 2025 compared to the same period last year. Borrowing during that period was $41 billion higher.

A Treasury Department official told the Associated Press that the spending increase was due to a combination of Social Security cost-of-living increases, higher Medicaid and Medicare costs and a jump in Pentagon spending.

You may recall that President Biden promised that the [purported] spending cuts would save "hundreds of billions" with the debt ceiling deal (aka the [misnamed] Fiscal Responsibility Act). 

That never happened.

And it looks like Republicans aren't going to do any better. The spending plan being shuffled through Congress would increase the deficit by about $6 trillion over the next decade.

The chair of the Committee for a Responsible Federal Budget, Maya MacGuineas, called the figures "undeniable".

We are accumulating debt at an alarming rate, and it is unlikely to end any time soon. In fact, lawmakers seem hell-bent on adding to that sum with trillions in unpaid tax cuts and spending increases. We need to correct the unsustainable course we are on and start focusing on cleaning up our nation's finances before it is too late.

The truth is that the federal government is always finding new reasons to spend money, whether for natural disasters at home or for wars abroad. The Biden administration spent a staggering $6.75 trillion in fiscal year 2024, a 10% increase over 2023 spending.

Interest on the national debt amounted to $104.4 billion in March. This brought total interest expense for the fiscal year to $582.46 billion, up 11.6% from the same period in 2024.

To date, in FY 2025, the federal government has spent more on interest on the debt than on national defense ($466 billion) or Medicare ($469 billion). The only higher spending category is Social Security. 

Uncle Sam paid $1.13 trillion in interest expense in FY2023. It was the first time interest expense exceeded $1 trillion. Interest expense is projected to break that record in FY 2025.

Much of the current debt was financed at very low rates before the Federal Reserve began its rate hike cycle. Each month, some of those extremely low-yielding securities mature and must be replaced by bonds with much higher rates. And even with the Fed's recent rate cuts, Treasury yields have risen as demand for U.S. debt plummets. 

This is one of the reasons why everyone is clamoring for interest rate cuts.

These large deficits come on top of a national debt that officially surpassed $36 trillion in November. Currently, the debt level is holding steady because the federal government is close to the debt ceiling. However, a substantial increase in debt can be expected once Congress raises the ceiling (and it will raise it).

Some people claim that loans, expenses and large national debts do not matter.

They do.

According to the national debt report, the current debt level represents 122.65% of GDP. Various studies have shown that a debt-to-GDP ratio of over 90 % retards economic growth by approximately 30 %. 

And, as the Bipartisan Policy Center points out, the growing national debt and increasing fiscal irresponsibility undermine the dollar. 

"Confidence in the solvency of the United States could be undermined by the rapidly deteriorating fiscal situation and growing concerns that federal debt will increase substantially in the coming years."

This could lead to lower economic growth, higher unemployment and lower investment wealth.

Lack of confidence in the U.S. fiscal situation could also reduce demand for U.S. debt. This would further raise interest rates on U.S. Treasuries to attract investors, which would exacerbate the interest payment problem. As mentioned above, we see a sharp rise in Treasury yields despite the Fed's rate cuts.

Biden increased the debt at a dizzying pace, but, in fairness, this is not just Biden's problem. Every president since Calvin Coolidge has left the U.S. with a national debt larger than it was when he took office. 

It will take more than DOGE rooting out waste to control borrowing and spending. Even if the Trump administration succeeds in drastically cutting discretionary spending as promised, this only accounts for 27% of total spending. The vast majority goes to welfare benefits, and there is little political will to drastically cut Social Security or Medicare.

And the sad reality is that most people in positions of power are content to defer debt. They reason: "Nothing has happened yet, why bother?". But the problem with procrastinating on debt is that you eventually run out of road. 

Mike Maharrey, Money Metals