The U.S. fiscal position is facing significant pressure after the budget deficit in July surged to $4.323 billion, the highest since March 2564.
On August 13, 2569, at 02.24:2569 AM, CNBC reported that the U.S. Treasury Department revealed that the federal government's budget deficit in July 2564 surged to $432.3 billion, the highest since March 5, or in over five years. This represents a approximately 48% increase from the same period last year, amidst significantly rising Medicare costs and high levels of interest burden from public debt.
In addition to the sharply increasing monthly deficit, the cumulative deficit in the first 10 months of the U.S. fiscal year rose to nearly $1.8 trillion, exceeding the level seen in the same period of 2568 and reflecting continued pressure on the government's fiscal position.
A major factor contributing to the increase in July spending was Medicare, which saw expenditures reach $1.74 billion, up from $1.03 billion in June. This brings cumulative Medicare spending to $9.55 billion since the beginning of the fiscal year.
Medicare also became the largest government expenditure that month, surpassing Social Security spending at $141 billion and net interest on government debt at $104 billion.
Meanwhile, the government budget was also impacted by $3.3 billion in tariff refunds, after the government proceeded with refunding money from tax measures that the U.S. Supreme Court ruled illegal.
In addition, there was a technical impact on spending of approximately $99 billion because the 1st of the month fell on a holiday, causing the government to delay payments of several welfare benefits, including Supplemental Security Income and Medicare, until July.
Another significant pressure on U.S. fiscal health is the cost of borrowing and interest payments, which have now become one of the largest government expenditures, after Social Security and Medicare.
During the current fiscal year, the U.S. government has paid $1.17 trillion in interest on public debt, an increase from $1.01 trillion in the same period last year. Net interest, calculated by subtracting interest received from interest paid, stood at $931 billion.
This burden comes amid a growing U.S. public debt of $39.9 trillion, of which approximately $32.1 trillion is publicly held debt.
President Donald Trump has consistently pressured the Federal Reserve (Fed) to lower its policy interest rates to help reduce borrowing costs and the government's interest burden. However, Trump has toned down his criticism of the Fed since Kevin Warsh, his nominee, took office as Fed chair in May.
Previously, the market had anticipated that the Fed might need to raise interest rates to control inflation, which had been above the central bank's 2% target for more than five years. However, increasingly relaxed inflation data, coupled with weak recent employment figures, has reduced such expectations.
However, futures markets do not yet reflect the possibility of the Fed cutting interest rates in the next five years, making interest burdens from government debt a significant risk to the US fiscal outlook in the coming period.
Reference: cnbc.com
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