The U.S. government spent $173 billion more than it collected in revenues in November. But as bad as that sounds and is, it is nevertheless better than the $193 billion deficit posted in October and the $364 billion deficit posted in November last year in the final months of former President Joe Biden‘s dreadful, profligate presidency. Expiring COVID-19-era spending and President Donald Trump‘s tariffs reduced the federal deficit as a percentage of gross domestic product from 6.3% in fiscal 2024 to 5.9% in fiscal 2025. It’s a real improvement that can be sustained only if Trump and Congress stanch the spending spigots and do not open them again.
The largest drivers of our federal deficit, both in terms of total spending and spending growth, remain the two largest entitlement programs: Social Security and Medicare. The federal government paid out $1.6 trillion in Social Security benefits in fiscal 2025, up 8.4% from the year before. Medicare spending also grew at an unhealthy 8.5% clip, rising to $992 billion.
The Congressional Budget Office’s Summary for fiscal 2025 revealed that the federal government spent more servicing existing debt than it spent on defense ($1 trillion versus $868 billion), but the growth of interest payments (8.3%) also grew almost twice as fast as military spending (4.5%). This is a trajectory of doom.
The problem, as we have said before, is not having too few taxes or rates that are too low. Revenues have risen sharply in real terms and as a percentage of the economy, from $2.2 trillion and 16.2% of GDP in 2023 to $2.7 trillion and 17.3% of GDP this year. The growth in tariff revenue has been particularly strong, more than doubling in 2025, although there is ample evidence that these higher taxes have also slowed what could have been stronger economic growth; that is always the way with taxes.
Stronger economic growth since Trump became president, and expiring Biden spending at the Department of Education, means debt as a percentage of GDP actually fell last year from 23.3% in 2024 to 23.1% in 2025. This is little progress. But if we want to be able to defend ourselves, we need this movement to continue in a positive direction, not slip backward.
Because this matter is so urgent, spending proposals by both parties are worrisome. On the Republican side, Trump wants to take the $100 billion or more that his tariff regime is pulling into the Treasury and send it back to taxpayers in the form of “dividend checks.” Not only is there no statutory authority for such a program, but it would also undo the little progress that has been made on deficits and would probably cause another round of inflation just when it might be returning to control after the deeply damaging Biden years.
Democrats, of course, have spending plans that are far worse, which include renewing Obamacare bonus subsidies that have added massively to both costs and fraud. As life expectancy declines, the primary beneficiaries of the subsidies are insurance brokers filing fraudulent exchange applications and wealthy individuals who retire early. Neither of these groups is worth going deeper into debt over.
The modest deficit progress of the past year shows that Washington is capable of improvement when emergency spending expires, and economic growth is allowed to do its work. But that improvement is fragile. New spending schemes, whether dressed up as Republican “dividend checks” or Democratic subsidy extensions, would quickly erase these gains.
With entitlement growth and interest costs crowding out core priorities such as national defense, the last thing the country can afford is fiscal complacency. If lawmakers are serious about sustaining economic growth, protecting national security, and avoiding another inflationary spiral, the path forward is clear: lock in restraint, resist new spending temptations, and stop pretending the deficit problem can be solved without spending discipline.