By Andrew Moran and Nathan Worcester
The U.S. government deepened its fiscal year financial shortfall in May, but Treasury Department data signaled that fiscal progress might be happening.
According to the Monthly Treasury Statement, the federal government registered a $316 billion budget deficit last month, a 9 percent decline from the same month a year ago.
However, after adjusting for shifts in the fiscal calendar due to benefit payments, the deficit was $219 billion, a 17 percent decrease from May 2024.
Federal tax receipts rose about 15 percent year over year, totaling $371.222 billion.
Outlays totaled $687.233 billion in May, representing an approximately 3 percent increase from the same period a year earlier.
In total, the fiscal year 2025 budget gap widened to $1.365 trillion, 14 percent higher than a year ago.
Revenues from President Donald Trump’s tariffs helped offset some of the shortfall, exceeding $22 billion.
So far this fiscal year, customs receipts have climbed approximately 60 percent to $81 billion.
In the first nine days of June, the U.S. government has collected nearly $2 billion of “Customs and certain excise taxes,” according to the June 9 Daily Treasury Statement.
The largest budgetary items in May were Medicare ($149 billion), Social Security ($132 billion), and health care ($80 billion).
Interest on the national debt, which has become a top spending item for the federal government in recent years, was the third-largest expense last month, totaling $86 billion. Fiscal year-to-date, net interest payments reached $665 billion.
The Treasury projects that gross interest charges—the total interest paid on Treasury debt securities—will surpass $1.2 trillion this fiscal year.
The White House has touted efforts to lower interest rates by improving America’s fiscal health.
Despite the benchmark 10-year Treasury yield’s massive fluctuations this year, it is slightly lower than when Trump returned to the Oval Office in January. Additionally, the 10-year yield is little changed from a year ago.
Demand for U.S. government debt was solid during the $39 billion 10-year auction on June 11.
According to the Treasury auction data, investors accepted a 4.421 percent yield on the note, about 0.6 basis points below the yield observed prior to the bidding deadline.
Deficit Talk in Washington
U.S. investors purchased nearly 20 percent of the supply, higher than the 12-month average of 14.5 percent. Foreign bidders bought 71 percent, slightly under the 73.4 percent average.
Appearing before the House Ways and Means Committee on June 11, Treasury Secretary Scott Bessent expects the current tax year budget deficit will come in between 6.5 and 6.7 percent as a share of GDP.
“What I believe is that everyone on the Democratic side voted for the biggest blowout for the deficit in history, and we are suffering from that this tax year,” Bessent told the tax-writing committee.
Washington has been entrenched in a debate surrounding the president’s One Big Beautiful Bill Act.
Republican lawmakers are fractured over the legislation’s contribution to growing debt and deficits.
Various estimates indicate that it will add between $2 and $3 trillion to deficits over the next 10 years.
The Congressional Budget Office, a nonpartisan budget watchdog, estimates that the bill would reduce outlays by more than $1.25 trillion through the 2025–2034 budget window; however, revenues would also decline by nearly $3.7 trillion.
In a separate June 4 report, the CBO projected that tariff income would trim primary deficits by $2.5 trillion in the coming decade.
Sen. Jim Justice (R-W.Va.) told The Epoch Times that it does not matter if the bill lowers spending by $1.2 trillion over the next 10 years.
What is important, he says, is to identify every single dollar and determine where it is going.
“I want to see us be able to get rid of every single bit of waste, have the discipline to absolutely do the right and prudent things, and then I want to see us grow our way out of the mess,” Justice said.
Proponents have emphasized the importance of passing the One Big Beautiful Bill Act, as it would extend the president’s 2017 tax cuts.
Trump and GOP lawmakers say that 68 percent of Americans would receive a tax increase if the bill were not passed.
This is in line with a Tax Foundation analysis that determined 62 percent of tax filers will pay more in taxes in 2026 if the law expires.
Democrat lawmakers contend that the tax-and-spending plan would be skewed in favor of the wealthy.
According to a May 13 analysis by the Joint Committee on Taxation, the average tax rate would fall for most Americans.
