The federal budget deficit worsened in December, resulting in a first fiscal quarter deficit that was almost 40% higher than the previous year. In December 2024, the deficit reached $86.7 billion, marking a 33% decrease compared to the same period in the prior year, as reported by the Treasury Department on Tuesday. However, this brought the total deficit for the first three months of the fiscal year to $710.9 billion, which was $200 billion more than the corresponding period in the previous year, representing a 39.4% increase.
Increasing financing costs, ongoing spending growth, and decreasing tax revenues have contributed to the escalating deficits, causing the national debt to exceed $36 trillion. While short-term Treasury yields have remained relatively stable in the past month, long-term rates have surged. The 10-year note yield recently stood at around 4.8%, up by approximately 0.4 percentage points from a month earlier.
During the first quarter, expenditures were 11% higher than the previous year, while receipts decreased by 2%. Interest payments on the national debt in fiscal year 2025 amounted to $308.4 billion, a 7% increase from the previous year. It is projected that financing costs will exceed $1.2 trillion for the entire year, surpassing the record set in 2024.
This year, the government has allocated more funds to interest payments than any other category except for Social Security, defense, and healthcare.
