US October-February budget deficit hits record $1.147 trillion

By David Lawder

WASHINGTON (Reuters) -The U.S. budget deficit for the first five months of fiscal 2025 hit a record $1.147 trillion, the Treasury Department said on Wednesday, including a $307 billion February deficit for President Donald Trump's first full month in office that was up 4% from a year earlier.

The October-February deficit, which included nearly four months until January 20 under former president Joe Biden, topped the previous record $1.047 trillion from October 2020 to February 2021 - a period marked by high COVID-19 relief spending and pandemic-constrained revenues.

The Treasury said February's deficit rose $11 billion from the same month in 2024, as outlays for debt interest, Social Security and health care benefits swamped growth in revenues.

The results showed little impact from Trump's initial import tariffs on major trading partners and his administration's efforts to slash government spending so far.

February receipts totaled $296 billion, a record for that month. That figure was up 9%, or $25 billion, compared with the year-earlier period. But outlays in February totaled $603 billion, also a record for that month, and up 6%, or $36 billion, from a year earlier.

After calendar adjustments for both receipts and outlays, the adjusted deficit would have been $311 billion, matching the record February reported budget deficit in 2021, which was driven by COVID-19.

The Committee for a Responsible Federal Budget, a fiscal watchdog group, said government borrowings so far this fiscal year work out to about $8 billion a day.

"What needs no confirmation is that we are almost halfway through the fiscal year and yet we have done nothing in the way of making progress toward getting our skyrocketing debt under control," the group's president Maya MacGuineas said in a statement.

Fiscal year-to-date receipts rose 2%, or $37 billion, to a record $1.893 trillion, but outlays grew 13%, or $355 billion, to a record $3.039 trillion.

Including calendar shifts of benefit payments, the adjusted year-to-date deficit would have been $1.063 trillion - still a record - up 17%, or $157 billion, from the prior-year period.

EFFECTS OF TARIFFS, DOGE

Trump imposed an additional 10% tariff on Chinese imports on February 4, but that increase did not materially impact customs receipts last month and will likely start showing up in March data, a Treasury official said. Trump increased the extra duty on Chinese goods to 20% on March 4.

Net customs receipts totaled $7.25 billion in February, down from $7.34 billion in January but up from $6.21 billion in February 2024.

The budget results for February did not show an appreciable change in overall outlays as a result of Trump's drive to slash the federal workforce and government spending through the informal Department of Government Efficiency, known as DOGE, led by billionaire entrepreneur Elon Musk.

The Department of Education, a major target of DOGE for cuts, saw its outlays fall to $8 billion last month from $14 billion in the year-earlier period. The Treasury official attributed the decline to reductions in outlays for elementary and secondary education programs.

The U.S. Agency for International Development, which the Trump administration is attempting to dismantle, still showed an outlay of $226 million for February, compared to $542 million in the year-earlier period.

Driving the spending growth in February and year-to-date periods were higher spending on Treasury's interest on the public debt, outlays for Child Tax Credit payments and increased Social Security payments due in part to a 2.5% cost-of-living adjustment for 2025.

For the year-to-date period, Treasury's interest costs for the public debt came to $478 billion, up about 10%, or $45 billion, from a year earlier and outstripping military outlays of about $380 billion. Social Security outlays grew 8% to about $663 billion.

(Reporting by David Lawder; Editing by Paul Simao and Nia Williams)