US Fiscal Deficit Hits Record High... Increases by 1,220 Trillion Won Over 4 Months

Impact of Increased Spending on Debt Interest and Social Security
Revenues Remain Largely Unchanged from Last Year
U.S. Treasury Secretary: "We Will Reduce the Deficit"

The United States' fiscal deficit increased by $840 billion (approximately 1,220 trillion won) over four months from October last year to January this year, marking a record high. This was due to increased spending on healthcare, social security, and debt interest.

According to Bloomberg News, the U.S. Treasury Department reported on the 12th (local time) that the federal government's fiscal deficit grew by $840 billion during the first four months of fiscal year 2025 (from last October to this January). Revenues remained stagnant, but spending increased in areas such as healthcare and social security, veterans' support, and debt interest. The U.S. government fiscal year runs from October 1 to September 30 of the following year.

According to the Treasury Department, the fiscal deficit increased by $129 billion in January alone. As a result, the cumulative deficit from last October to this January expanded by 25%. Revenues over the past four months totaled $1.6 trillion, which is nearly the same as the same period last year.

During this period, expenditures totaled $2.44 trillion, a 7% increase compared to the same period last year. Interest costs on existing debt accounted for the largest share of spending. As low-interest government bonds matured, new bonds had to be issued, and with the Federal Reserve raising interest rates significantly in 2022 and 2023, the interest burden increased. Interest costs from last October to this January amounted to $392 billion.

Spending related to Medicare (public health insurance for the elderly) and social security beneficiaries also increased due to the growing number of recipients. The so-called PACT Act, which expands medical benefits and compensation for veterans exposed to harmful substances during wartime, also contributed to increased spending.

Earlier, U.S. Treasury Secretary Janet Yellen set a goal to reduce the fiscal deficit as a percentage of Gross Domestic Product (GDP) from 6.4% last year to 3% in the future. However, Bloomberg pointed out that the expanding fiscal deficit despite continuous employment growth and economic expansion shows how difficult it is for the U.S. government to reduce its fiscal deficit.

This increase in the deficit is expected to strengthen the voices of U.S. Republican lawmakers who advocate for spending cuts. The Republican Party, which holds the majority, announced a budget plan on the 12th (local time) in the House of Representatives that includes large-scale tax cuts, government spending reductions, and raising the debt ceiling. The Republican budget plan also includes provisions to reduce government spending by at least $1.5 trillion over the next 10 years.

This content was produced with the assistance of AI translation services.