During the first half of fiscal year 2025, the US government had 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 statement from the Treasury Department. The only larger half-year budget deficit was $1.7 trillion in the first half of fiscal year 2021, when the economy was paralyzed and the government prioritized delivering funds to address the pandemic.

During the first six months of fiscal year 2025, the US Treasury collected $2.26 trillion. This figure was slightly higher than the $2.19 trillion collected during the first half of fiscal year 2024.

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

The real problem lies on the spending 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 increase in spending was due to a combination of cost-of-living increases in Social Security, 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 (also known as the [misnamed] Fiscal Responsibility Act). 

That never happened.

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

The president 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 anytime soon. In fact, lawmakers seem determined to increase 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 always finds new reasons to spend money, whether it's for natural disasters at home or 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 totaled $104.4 billion in March. This brought total interest spending for the fiscal year to $582.46 billion, up 11.6% from the same period in 2024.

To date in fiscal year 2025, the federal government has spent more on debt interest 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 expenses in fiscal year 2023. It was the first time interest expenses exceeded $1 trillion. Interest expenses are projected to break that record in fiscal year 2025.

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

This is one reason why everyone is clamoring for interest rate cuts.

These large deficits add to a national debt that officially surpassed $36 trillion in November. Currently, the debt level remains stable because the federal government is close to the debt ceiling. However, a significant increase in debt can be expected once Congress raises the ceiling. (And it will raise it.)

Some people claim that borrowing, spending, and large national debts don't 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 above 90% slows economic growth by approximately 30%. 

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

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

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

Lack of confidence in the US fiscal situation could also reduce demand for US debt. This would further raise US Treasury bond interest rates to attract investors, exacerbating the interest payment problem. As mentioned above, we are seeing a sharp rise in Treasury bond yields despite the Fed's rate cuts.

Biden increased the debt at a dizzying pace, but to be fair, this is not just a Biden problem. Every president since Calvin Coolidge has left the US with a larger national debt than they had when they took office. 

It will take more than DOGE eradicating waste to control borrowing and spending. Even if the Trump administration manages to drastically cut discretionary spending as promised, this only accounts for 27% of total spending. The vast majority goes to social 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 kick the debt down the road. They reason, “Nothing has happened yet, so why worry?” But the problem with kicking the debt down the road is that eventually, the road ends. 

Mike Maharrey, Money Metals