Despite all the talk about spending cuts and rising revenues out of the Trump White House, the budget deficit is worse now than it was at the end of Biden’s term. Even with a big surge in tariff revenue, the Trump administration still ran a massive shortfall in July.
Customs receipts tripled compared to July 2024, but the federal government still spent $294.14 billion more than it took in. The July deficit was 19 percent higher than a year ago, and bigger than Biden’s $221 billion deficit in July 2023.
The July budget shortfall drove the fiscal 2025 deficit to $1.63 trillion with two months remaining.
To put that in perspective, it’s bigger than the budget deficit through the same period in President Joe Biden’s last year in office ($1.52 trillion) as well as through the same period in fiscal 2023 ($1.62 trillion).
This underscores the fact that the federal government doesn’t have a revenue problem. It has a spending problem.
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 duties. 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 tariff revenue. 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.
In a recent interview on Face the Nation, Commerce Secretary Howard Lutnick inexplicably claimed tariffs would “pay off our deficit.” This is clearly untrue. The only way to close the budget gap is to rein in federal spending.
That’s not happening.
The Trump administration blew through $629.64 billion in July. That was 10 percent higher than last year and 26.7 percent higher than July ’23.
And there is no indication that spending will slow down — ever.
There was a lot of talk about DOGE and spending cuts in the early days of Trump’s term, but that never translated into a slowdown in spending.
Meanwhile, the Big Beautiful Bill “cut” some spending but increased it in other areas. Furthermore, the “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.
Rather than figuring out how to cut spending and debt, today, excessive borrowing and spending are a bipartisan sport. It’s almost as if they’re competing to see who can be the worst.
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