U.S. Federal Deficit Hits $1.626 Trillion in First 10 Months of FY2025

The U.S. federal deficit for the first 10 months of fiscal year 2025 reached $1.626 trillion, according to the Congressional Budget Office (CBO), reflecting a $109 billion increase compared to the same period in FY2024 [1]. This rise is attributed to a 7% growth in government spending and a 6% increase in revenue, highlighting the widening gap between outlays and income. The CBO projects that the full-year deficit could reach $1.9 trillion by the end of FY2025, signaling continued fiscal pressure amid ongoing economic and legislative developments [2].

The deficit increase is primarily driven by elevated interest costs and expanded government operations, including new funding measures under the “One Big Beautiful Bill Act (OBBBA),” which allocates over $100 billion to Immigration and Customs Enforcement (ICE) by 2029 [3]. In addition, the Trump Administration’s implementation of new tariff rates—ranging from 10 to 41 percent—aims to generate additional revenue but could also disrupt international trade relations and lead to retaliatory actions from trading partners [4].

Analysts note that while the deficit does not directly impact cryptocurrency markets, the broader macroeconomic environment may influence investor sentiment and liquidity conditions. For example, the U.S. Treasury’s increased borrowing could affect interest rate expectations, which in turn may influence capital flows and asset valuations across various markets [5]. However, no specific digital assets have been identified as being directly affected by these fiscal developments [6].

Efforts to address fiscal sustainability are ongoing, with calls to reinstate and strengthen “Pay-As-You-Go” (PAYGO) rules to ensure that new spending initiatives are offset by revenue measures. The Committee for a Responsible Federal Budget has emphasized the importance of such fiscal discipline in preventing further debt accumulation [7]. Yet, recent legislative proposals have included provisions that could reduce government revenues by up to $900 million over FY2025–2026, complicating efforts to stabilize the deficit [8].

Internationally, some analysts have drawn comparisons to the Swiss debt brake model as a potential framework for reforming the U.S. debt ceiling mechanism. However, political challenges remain significant, and there is no indication that such reforms will be enacted in the near term [9]. Meanwhile, domestic initiatives such as the Centers for Medicare & Medicaid Services’ efforts to combat Medicare fraud aim to improve fiscal accountability but are unlikely to address the scale of the current deficit [10].

The growing deficit raises concerns about the long-term sustainability of U.S. fiscal policy and the country’s ability to manage competing priorities, including national security and social programs. As the fiscal year continues, policymakers will need to balance immediate spending needs with longer-term fiscal responsibilities, with the ultimate outcome shaping public confidence and economic stability.

Sources:

[1] Congressional Budget Office (CBO) – FY2025 Deficit Update, https://coinmarketcap.com/community/articles/689b280721bc2a555c718858/

[2] Congressional Budget Office (CBO) – FY2025 Deficit Report, https://www.crfb.org/

[3] Congressional Budget Office (CBO) – FY2025 Reconciliation Analysis, https://www.wikipedia.org/wiki/One_Big_Beautiful_Bill_Act

[4] Congressional Budget Office (CBO) – Tariff Policy Assessment, https://www.crfb.org/blogs/2025-reconciliation-tracker

[8] Pennsylvania Department of Finance – Fiscal Impact of Legislation, https://www.ifo.state.pa.us/

[9] The Conference Board – International Debt Models, https://www.conference-board.org/research/ced-policy-backgrounders/swiss-debt-brake-us-debt-ceiling