(Mike Maharrey, Money Metals News Service) The federal government ran a big budget surplus in April, but don’t get too excited. Uncle Sam hasn’t solved its spending problem.
In fact, it’s getting worse.
The U.S. government typically runs a surplus in April with the surge of tax receipts. This year, federal receipts got a further boost thanks to an influx of tariff money.
According to the latest monthly Treasury statement, the government took in $258.4 billion more than it spent in April.
Federal tax receipts came in at $850.17 billion in April. That was more than double March’s federal revenue of $367.65 billion and a 9.53 percent increase from April 2024.
Net customs duties were up about $9 billion compared to one year ago. Through the first seven months of fiscal 2025 (beginning Oct. 1), net customs duties totaled $63 billion. That compares with $48 billion in the same period a year earlier.
While this windfall helped paper over the federal budget problem, tariff revenue will likely fall off as Trump negotiates trade deals to lower duties and markets adjust to the higher taxes. Plans to implement additional tax cuts being tossed around D.C. would also put a strain on federal receipts.
Meanwhile, the real problem has been, and continues to be, unrestrained government spending.
The Trump administration blew through $591.77 billion in April. That was 4.4 percent higher than April 2024’s spending. At $4.16 trillion, spending is up 8.9 percent through the first seven months of fiscal 2025.
The fiscal year budget deficit currently stands at $1.05 trillion. That’s 22.8 percent higher than through the same period in fiscal 2024.
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.
And despite headlines touting the success of DOGE, it appears the Republicans aren’t going to do any better. Furthermore, a spending plan being kicked around by Congress would increase the deficit by some $6 trillion over the next decade.
The truth is that the federal government always manages to find new reasons to spend money, whether for natural disasters at home or wars overseas. The Biden administration blew through a staggering $6.75 trillion in fiscal 2024, a 10 percent increase over 2023 outlays.
Interest on the national debt cost $101.7 billion in April. That brought the total interest expense for the fiscal year to $684.1 billion, up 9.5 percent over the same period in 2024.
So far, in fiscal 2025, the federal government has spent more on interest on the debt than it has on national defense ($536 billion) or Medicare ($550 billion). The only higher spending category is Social Security ($907 billion).
Uncle Sam paid $1.13 trillion in interest expenses in fiscal 2023. It was the first time interest expense had ever eclipsed $1 trillion. Projections are for interest expense to break that record in fiscal 2025.
Much of the debt currently on the books was financed at very low rates before the Federal Reserve started its hiking cycle. Every month, some of that super-low-yielding paper matures and has to be replaced by bonds yielding much higher rates. And even with the recent Federal Reserve rate cuts, Treasury yields have pushed upward as demand for U.S. debt sags.
This is one of the reasons everybody is clamoring for interest rate cuts.
These big deficits pile onto a national debt that officially topped $36 trillion in November. Currently, the debt level is steady because the federal government is up against the debt ceiling. However, you can expect a huge surge in debt once Congress raises the ceiling. (And it will raise the ceiling.)
Some people claim that borrowing, spending, and big national debts don’t matter.
They do.
According to the national debt clock, the current debt level represents 122.81 percent of the GDP. Studies have shown a debt-to-GDP ratio of over 90 percent retards economic growth by about 30 percent.
And as the Bipartisan Policy Center points out, the growing national debt and the mounting fiscal irresponsibility undermine the dollar.
“Confidence in U.S. creditworthiness may be undermined by a rapidly deteriorating fiscal situation, an increasing concern with federal debt set to grow substantially in the coming years.”
This could lead to lower economic growth, higher unemployment, and less investment wealth.
Lack of confidence in the U.S. fiscal situation could also lower demand for U.S. debt. This would force interest rates on U.S. Treasuries even higher to attract investors, exacerbating the interest payment problem. As already mentioned, we saw a big spike in Treasury yields despite Fed rate cuts.
Biden ran the debt higher at a dizzying pace, but to be fair, this isn’t just a Biden problem. Every president since Calvin Coolidge has left the U.S. with a bigger national debt than when he took office.
It’s going to take more than DOGE rooting out waste to get the borrowing and spending under control. Even if the Trump administration manages to slash discretionary outlays as promised, that only accounts for 27 percent of total spending. The vast majority is for entitlements, and there is little political will to take the scissors to Social Security or Medicare.
And the sad fact is that most people in positions of power are content to kick the debt can down the road. They reason, ‘Nothing has happened yet, so why worry?’ But the problem with playing kick the can down the road is that you eventually run out of road.
Mike Maharrey is a journalist and market analyst for Money Metals with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
