The U.S. Treasury and the Joint Economic Committee released the Monthly Fiscal Update last week, highlighting a 2.8% reduction in the federal deficit for Fiscal Year 2025 (FY2025), totaling $1.776 trillion compared to $1.828 trillion in FY2024.
The decrease was driven by record-setting tariff collections, increased tax receipts, and modifications to the student loan program approved in the 2025 reconciliation act.
September 2025 concluded with a notable surplus of $197.950 billion, reflecting strong fiscal performance with net outlays of $345.713 billion and net receipts of $543.663 billion for the month.
In FY2025, total federal net outlays reached $7.010 trillion, a 3.91% increase from $6.746 trillion in FY2024. Net receipts rose to $5.235 trillion, up 6.42% from $4.919 trillion in the prior fiscal year.
Despite the robust revenue growth, 25.33% of FY2025 outlays were not covered by revenues, resulting in the federal government spending $1.34 for every dollar received. The Congressional Budget Office (CBO) projects continued growth in outlays and receipts, forecasting net outlays of $7.294 trillion in FY2026, $7.622 trillion in FY2027, and $8.019 trillion in FY2028, with deficits projected at $1.713 trillion, $1.687 trillion, $1.911 trillion, respectively, over the same period.
Outlays by Category
Social Security remained the largest federal expenditure in FY2025, totaling $1.581 trillion (22.5%), followed by Income Security and Veterans Benefits at $1.079 trillion (15.4%), Medicare at $996.72 billion (14.2%), and Net Interest at $970.66 billion (13.8%).
Defense spending accounted for $868.41 billion (12.4%), while Medicaid outlays were $668.14 billion (9.5%). Foreign Aid and other outlays represented smaller shares, at $32.21 billion (0.5%) and $814.75 billion (11.6%), respectively.
Receipts by Category
Individual Income Taxes were the largest revenue source in FY2025, contributing $2.656 trillion (50.7%), followed by Social Insurance and Retirement Taxes at $1.748 trillion (33.4%).
Corporation Income Taxes added $452.09 billion (8.6%), while Customs Duties, boosted by record setting tariff collections, reached $194.87 billion (3.7%). Other receipts totaled $183.31 billion (3.5%).
Despite the deficit reduction, net interest payments on the national debt hit a record high of nearly $971 billion in FY2025, a $100 billion increase from FY2024. The Committee for a Responsible Budget projects that by 2051, interest payments will become the largest federal expense, surpassing Social Security.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
Here’s an economics lesson that belongs in the text books.
Student loan debt soared to more than $1.5 trillion during the Biden presidency and the response by Washington was to “forgive” hundreds of billions of these unpaid loans by deadbeat borrowers and let the taxpayers pick up the tab. It was never clear why the universities who charge exorbitant tuitions that have reached more than $75,000 a year at many elite schools shouldn’t bear the cost of the program – but that’s another story.
Those of us who watched these events upfold predicted that one result of this policy would be that many college graduates would stop paying back their loans. And guess what?
Just like clockwork, this headline from Bloomberg recently told the whole story:
“Student loans drive U.S. delinquency rate to highest since 2020”
Gee, who – except a bunch of head-in-the-sand- politicians in Washington – would have ever thought that forgiving as many people from paying their student loans as possible would increase future non-payments?
Well, the Biden administration for one. Now that the Department of Education is honestly reporting the data, we find that serious delinquency rates are over more than 10 times what the Biden Department of Education said they were.
There is an old saying in physics and economics: every action in the universe has a reaction. How many students in the future will pay back unpaid student loans when the next forgiveness program is right around the corner? So people who did the right thing and paid back their debts now have to pay more for the people who refused to pay back the money they owed.
In Washington, we love to reward vice and punish virtue.
As we said many times last year: expect student loan defaults to remain sky high for many years, as deadbeat borrowers wait for the next student loan amnesty program.
Fortunately, in the House of Representatives “Big Beautiful tax bill,” there are new caps of $50,000 on student loans for undergraduate students and $100,000 for grad students. This cap should help slow the stampede of higher tuition prices, which have grown two to three times the rate of overall inflation over the last thirty years. The availability of cheap student loans only fueled this stampede of tuition prices. The Wall Street Journal calls this move “The End of The College Free Lunch.”
The bad news is that we should anticipate bigger stashes of student loans to pile up at taxpayers’ doors in the years to come. The good news is that this scam has reminded us that in life incentives matter. This episode brought to light the financial foolishness of debt forgiveness programs and so hopefully we will never do this again.
Stephen Moore is a contributor to The Daily Caller News Foundation, a cofounder of Unleash Prosperity, and a former senior economic adviser to Donald Trump. His most recent book is “The Trump Economic Miracle.”
Recipients of President Joe Biden’s student loan forgiveness program appear to be wrestling with shoulder angels and devils over how they should spend their relief funds.
According to a recent survey of 1,250 applicants by Intelligent, 75 percent expressed interest in spending on essential items like groceries while 73 percent expressed interest in spending on nonessential items like vacations. 60 percent of these applicants said that student loans had an adverse impact on their life.
66 percent were likely to pay off their rent or mortgage, 65 percent were likely to pay off credit card debt, 62 percent were likely to fund transportation costs, 60 percent were likely to pay off medical care or other debts, and 40 percent were likely to pay for childcare.
Comparatively, 52 percent were likely to buy new clothing and accessories, 46 percent were likely to go on a vacation, 46 percent were likely to eat out, 44 percent were likely to buy a smartphone, 43 percent were likely to invest in the stock market, 42 percent were likely to buy gifts, 36 percent were likely to buy a gaming system, 30 percent were likely to finance their wedding, 28 percent were likely to buy drugs or alcohol, and 27 percent were likely to go gambling.
Despite 73 percent of respondents saying that they would spend their forgiveness funds on nonessentials, 73 percent also said that doing so would be wrong. 84 percent of male respondents were likely to spend on nonessentials, versus 65 percent of female respondents; 80 percent of male respondents said that doing so would be wrong, versus 67 percent of females.
Twice as many Democratic applicants as Republicans insisted that these types of expenditures were acceptable.
The Eighth Circuit Court of Appeals blocked Biden’s student loan forgiveness program earlier this month (Missouri v. Biden). Despite the hold, the Biden administration told reporters that it continues to accept and review applications.
Biden predicted last Thursday that the order would soon lift, saying that his administration would be mailing checks sometime this week or the next. The funds wouldn’t be mailed in check form, but would be applied directly to their loan balances.
The president criticized Republicans for fighting the controversial program.
Nearly 22 million of 40 million eligible borrowers have applied for student loan forgiveness. Over 1.3 million Arizonans at least are eligible for relief. Applications don’t close until the end of next year.
Exactly one week ago, we launched our application where folks could apply for student loan debt relief. Over 22 million people provided the information we need to consider them for relief.
On Monday, the Biden administration announced reforms to other student loan forgiveness programs, such as relief for those victimized by colleges with false advertising or other forms of fraud. The administration also reformed rules for student loan forgiveness for government and nonprofit workers.
Join me at Delaware State University as I deliver remarks on student debt relief. https://t.co/itXrvGofUF
America’s political class can no longer put off the inevitable. They soon will have to pay for their insanely reckless fiscal practices.
It’s not going to be pretty. America’s debt has reached an appalling $31 trillion. Annual interest payments will exceed $1 trillion this year. Debt service is well on its way to crowding out other priorities, a trend which will only accelerate.
Unfortunately, a steep rise in interest rates occurred near the end of the biggest spending binge ever. Economists are warning we are nearing the dreaded “doom loop” in which interest costs can be covered only by more borrowing which further drives up interest expense, creating a vicious cycle.
There is a weird, almost preternatural calm about our dire fiscal future during this campaign season. We’ve seen much consternation about inflation, public safety, the border, and other critical issues. Yet politicians and the media hardly mentioned the debt crisis, so the public seems to assume everything is under control.
It isn’t, not by a long shot. Uncle Sam issued $7 trillion in new debt to finance the recovery from the COVID pandemic and our panicked overreaction to the disease. It’s too bad we can’t take back that $7 trillion.
Much of it was stolen by fraud and bureaucratic bumbling. Funds went to school districts, that haven’t spent them so far, to finance the indolence of those who preferred not to work and to Democrat pet projects like “climate change.” Millions of voters in no distress whatsoever got checks, as did some illegal immigrants.
Many economists predicted that injecting that much cash into the economy would cause inflation, especially since supply was limited by weakness in the labor market, fuel shortages, and supply chain problems. They were mostly ignored but turned out to be absolutely correct. After decades of relative price stability, we are now experiencing 8% inflation with no end in sight.
Millions of non-economists are experiencing what that does to your standard of living. Suddenly, food, fuel, and shelter have become existential concerns to millions of Americans, and the economic future looks dim.
Inflation also increases government spending. Social Security benefits are inflation-adjusted, resulting in an 8%, $100 billion increase. Total government healthcare costs will grow from $710 billion last year to $915 billion.
Financial markets cannot ignore the cloud of government debt hanging over our economy. A serious recession will almost certainly soon be upon us. Already, declining stock and bond values over the past nine months assure a steep decline in capital gains tax revenue, another contributing factor to the deficit.
The Federal Reserve board is doing the only thing it can to address inflation, which is to raise core interest rates. That also directly adds to the national deficit, increasing the interest cost and driving up the balance, since no other source of funds is available.
So, to summarize, unnecessary COVID-related spending of $7 trillion has combined with chronic overspending, which caused inflation, which increased borrowing costs, which drove up the deficit, thus precipitating a recession which will deprive the government of revenues to pay down the surging debt load. Way to go, guys.
The principle response of the Biden administration has been denial. Our president claims the economy is thriving. A monthly .1% drop in the inflation rate was the pretext for claiming inflation was in decline. The national debt is never mentioned, nor are the untold trillions in future promises we have made to senior citizens and others.
Instead, Biden issued a probably unconstitutional executive order “canceling” unpaid college loans – i.e., transferring the liability to taxpayers. It was terrible public policy, penalizing those who had behaved responsibly and incentivizing student indebtedness in the future. It spent yet more money in a desperate attempt to bribe some votes for the midterm elections.
Yet there seems to be little taxpayer resentment. Why should they care? Their taxes aren’t going to increase. The obligation will be added to the great river of debt passed on to future generations—you know, those little people who don’t vote yet.
They will inherit an America feeble and impoverished, that will have forfeited its greatness because of our greed and selfishness. STOP THE SPENDING!
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
At least 1,365,700 Arizonans will have about $19.2 billion in student debts forgiven through President Joe Biden’s student loan forgiveness handout. Those numbers could be much higher, since the U.S. Department of Education (USDE) noted in a Tuesday press release that they were unable to pinpoint the home states of over 5.1 million individuals with student debts.
According to the USDE, Arizona has approximately 554,900 Pell Grant recipients and 810,800 other types of borrowers. Pell Grant recipients will have $20,000 of their student loans forgiven (approximately $11.1 billion), while other borrowers will have $10,000 forgiven (approximately $8.1 billion).
The Biden administration’s plan prioritizes those with lower income. Nearly 90 percent of student relief funds will go to those earning less than $75,000 a year. For Arizona, that’s about $17.2 billion of the student loans that will be forgiven.
Those who earn over $125,000 a year ($250,000 for households) are excluded from student debt forgiveness. That means 10 percent of the student relief funds will go to those who earn between $75,000 and $125,000 a year. For Arizona, that accounts for about $1.9 billion of the student loans that will be forgiven.
The USDE explained in a Tuesday press release that lower income borrowers were prioritized in order to “narrow the racial wealth gap.” The DOE noted that nearly 71 percent of Black individuals and 65 percent of Latino individuals with student debt were Pell Grant recipients.
In all, the Biden administration estimates that over 40 million Americans would have some amount of student debt forgiven, with nearly 20 million having all of their student debt forgiven entirely.
News: @WhiteHouse has released state-by-state data on the estimated number of student loan borrowers & Pell Grant recipients eligible for student loan debt relief under @POTUS’ plan. https://t.co/1hdCw5cNTt
In addition to issuing mass student loan forgiveness, the Biden administration extended its moratorium on student debt payments until January 2023.
Members of Congress were quick to point out that Biden’s declaration on Sunday that the pandemic is over meant that his continued suspension of student loan repayments, as well as his plan to issue billions in debt forgiveness, weren’t justifiable.
Biden admitted last night that the COVID pandemic is over.
In other words, there is no ‘ongoing emergency’ to justify his proposal for student loan handouts.
Congresswoman Debbie Lesko (R-AZ-08) called Biden’s student loan forgiveness program an “unconstitutional […] debt scheme” that oversteps his executive authority.
President Biden used COVID-19 as an excuse for his unconstitutional student loan debt scheme, but he just admitted that the COVID-19 pandemic was over. Now, he no longer has any reason to justify his unprecedented breach of executive authority. https://t.co/3HJ8CJoCfk
Those who made payments on their student debt over the course of the pandemic will receive a refund of any payments that brought their debt below the maximum relief amount — but only if they didn’t pay their loan off in full.
The Biden administration claimed that the program will cost the country about $240 billion in lost revenue over the next decade, but private estimates are higher. The Penn Wharton Budget Model estimated that the program would cost between $605 billion and $1 trillion.
Regardless of the losses, the Biden administration expressed hope that the student debt forgiveness would result in greater economic activity elsewhere such as the housing market.
Applications for the student loan forgiveness program close on December 31, 2023.
