I & I Editorial BoardFor all the endless talk about “draconian” cuts, federal spending is running $172 billion ahead of last year, according to the Monthly Treasury Statement released Monday. And that includes a substantial increase in fraud-riddled Medicaid spending.
And spending continues to outpace increases in revenues, which means the deficit this year is now on track to top $2 trillion. The last time that happened was in the middle of the COVID-19 spending splurge.
To be sure, it’s not all bad news. Income and payroll taxes are running 6% ahead of last year, suggesting that – despite the doomsaying by Democrats and the media – the economy is creating more and better-paying jobs.
Trump’s tariffs are also bringing in much more revenue. They’re up $55 billion so far this fiscal year, compared with the same months in fiscal year 2025. That’s a 51% jump. (And a tripling from two years ago.)
We’re also seeing welcome spending reductions in departments such as Agriculture, Energy, Housing and Urban Development, Interior, State, and Labor.
Defense, meanwhile, has been getting a needed boost. It’s up $31 billion so far this year.
But the bad news is that spending is climbing faster than revenues are growing.
The really bad news is that Medicaid grants to states are up by a whopping $48.5 billion compared with last year. That’s a nearly 10% increase for a program beset with fraud that Republicans supposedly targeted for deep spending cuts, which readers of I&I have known all along was a lie. (See “One Chart To Kill The Medicaid Lies For Good.”)
Oddly, spending on “healthcare fraud and abuse control” is down.
Social Security payments are $63 billion higher. Medicare is up $47 billion. “Income security” is up $10 billion.
And interest on the debt? That’s running $78 billion ahead of last year.
Even Department of Education spending is up by $18 billion – all of it attributable to added costs of college subsidies.
In other words, “entitlement” spending is still out of control. And without reforms, they will swamp the budget and wreck the economy.
As the American Enterprise Institute’s Andrew Biggs put it, “Even today, eliminating discretionary spending entirely, including zeroing out the defense department, would barely balance the federal budget. In future years, entitlements plus debt service will take up nearly the entire federal budget.”
And that doesn’t even factor in the fact that both the Social Security and Medicare “trust funds” will soon be insolvent, which means neither program will be able to cover its costs. At that point, the choice for lawmakers is either benefit cuts, tax hikes, or some combination of the two.
The Democrats’ answer to this is to vastly expand federal entitlement programs and pretend that raising taxes on the “rich” will pay for it all.
For Republicans, burying their heads in the sand isn’t an option.
— Written by the I&I Editorial Board
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Everyone talks about the deficit. No one (either party or political leaning ) does anything about it. So it has always been and so will always be. Until something really bad happens. Then it will be someone else’s fault. Everyone will be surprised and will reply to the question of why they didn’t do anything about it, as in a Greek Chorus: “who me?”
I’m nearly 80 years old. I take SS and Medicare. Why? Because I was forced to pay for them all during my working years.
Eventually, the bullet will have to be bit. I know addressing the issues of entitlements (like SS and Medicare, like Medicaid and nearly all social spending-many of which, as I&I has pointed out are grifts) will have to be faced if this country is to survive as a non-bankrupt country (like Greece and Italy once were).
If security for the oldsters is to be maintained, get off the FDR railroad of how SS should operate. Let capitalism work for you and invest SS taxes into the S&P market of stocks.
The good part is that Government wouldn’t manage it and you’d earn much more; the bad part is that the stock market might dive. However, since the SS was established in the 1930’s it has risen in the long run.
Just hope you aren’t retired when it dips. By the way, this is a real good argument to add to the education our public schools are “giving” our children. Economics and personal finance (not to mention civics and US history) should be focused on all through the lower grades (till high school, at least).
Personally, I’d get rid of Government medicine completely. Let capitalism also raise the sum for medicine and hospital stays for those retired. In my opinion, the medical industry was much better run and the patient was better serviced when the Government wasn’t so much involved in the 1940’s and 50’s.
It is horrible, I admit, but the young who have been paying SS and Medicare taxes are again going have to sacrifice (as they did during the COVID imbroglio).
Also, many thanks to the I&I team for the analysis of the portions of our debt and deficit, It is much appreciated and a “bookmark” certainty.
Persons who didn’t take economics (or who didn’t run business) always like to muse about “investing the ‘Social Security tax money fund’ into the marketplace”.
There is no such “fund”. This tax money — like any other tax money — is spent/dispersed (mostly for Social Security recipients) the minute that it comes-in…
FDR and the New Dealers were very good at the propaganda of “converting” the public perception of their “pay-as-you-go” system into a “personal bank account” illusion.
False. The SSA surplus is invested in U.S. Treasury securities, which the government borrows, and pays interest on. That’s the fund.
That fund is now being spent down, and is predicted to be exhausted in the next decade. At that point, if nothing is changed, SS benefits will have to be cut substantially.
well if we can get all the fraud and stealing that the commiecrats were doing , we mite not even have to pay taxes, its that bad
why do we never talk about welfare or food stamps being in solvent, and running out of money?? Only Social Security and Medicare, for some of us who’ve paid into it our entire lives. Scare tactics?
Unlike welfare or food stamps, Social Security is designed to be funded through its own payroll tax and not the general fund. Whether it actually can or not is the solvency question.
SPENDING? ? “Spending” means that the money is there, and therefore only a jerk wouldn’t use it for some socially beneficial purpose.
The non-misleading word(s) are “money-printing”.
When it comes to CONgress, spending happens even though the money is not there. It’s simply charged to the national credit card – the national debt.
Social Security’s “Fast Facts & Figures About Social Security, 2025” reported that:
(a) 17% of all wages earned in 2024 were exempt from SS taxes because the SS “wage base” law exempted high-wage earners and employers from paying SS taxes on earnings above $168,600.
(b) The SS Trust Fund would have had a $127 billion revenue surplus instead of a $67 billion revenue shortage if there was no SS “wage base” law in 2024.
Repeal of Social Security’s “wage base” law should be the first step in restoring Social Security’s financial integrity.
I’m shocked that you consider Trump’s tariffs to be a positive thing. They are effectively taxes on American consumers. Do you believe Trump’s lie that foreign governments pay them?
Does that mean you oppose corporate taxes as well? As you say, they are effectively taxes on American consumers. Or do you believe the lie that companies pay them?
Saying that companies pay taxes on their profits is perfectly true, although it’s also true that the money generally comes from their customers.
Trump’s lie is at a whole different level. The exporting countries don’t pay Trump’s tariffs at all.
You ‘sound’ like a person who asserts everything Trump does or says is a lie. Whether or not that is true, saying “[tariffs] are effectively taxes on American consumers” is inaccurate (to be polite) or a brazen lie (to be less polite). Few people understand the complexity of tariffs. Directly tying tariffs to consumer prices in a closed system acknowledges only a sliver of the issues tariffs address. Trump embraces the leverage available through effective tariffs – the political, economic, and even global stability issues – and he uses them masterfully to compel other countries to behave in ways preferred by the USA. Trump has brought tremendous monetary and non-monetary value to the USA through his use of tariffs, political rhetoric, and other actions. That’s something our presidents have neglected for decades, and other countries have taken advantage of it as any capitalist would. (If we aren’t complaining, why should other countries give up the advantages we allow?)
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Incidentally, I hope you neither believe nor communicate the fraudulent assertion that a 15% tariff on a specific imported item directly increases the consumer price by 15%. I suspect you’re better informed than the gaggle of people who like to whine about the “extra 15%” (or whatever the tariff is on an item) they have to pay because of Trump’s tariffs. The decades-long failure of our school system to teach basic economics is highlighted by the genuine ignorance of many American consumers and workers, but that’s getting into a different discussion.
You report federal ‘income’ going up as if that was good news. That money comes from us. Yes, even tariffs end up costing American consumers, big-time. So the debt goes up, our interest payments on the debt go up, and more of our money is being taken from us every year in DC’s half-hearted effort to reduce the debt, which will end up bankrupting us.
The point being made there is that even though revenues are up, spending is still going up much faster, which further underscores the fact that spending is out of control.
I’d rather not have this posted as a comment, but I personally want you to know I appreciate your willingness to speak about the elephant (partial pun intended) in the room. I am a huge Trump supporter, but I don’t believe I have to say everything is great to be a supporter. The office of the U.S. President is in an awkward position with the ability to notably increase spending but far less ability to rein it in. The GOP, for all the rhetoric about the corrupt Left, has done little beyond Trump\’s directives to limit spending. I served boldly in the USAF as an Instructor Pilot and wartime pilot in hostile areas, but I have become more cowardly lately, hoping I won’t live long enough to witness the national and personal pain that our reckless deficit spending will ultimately cause. Thank you for the brutal honesty. (The large email font is due to my diminished vision.)