• Federal spending climbed to just over $7 trillion in fiscal year 2025, a $301 billion jump from the previous year
• Despite high-profile DOGE efforts, the budget deficit declined by only $8 billion to $1.8 trillion
• Social Security, Medicare, and Medicaid drove the largest spending increases at $245 billion combined

WASHINGTON, D.C. (TDR) — President Donald Trump returned to the White House promising to slash federal spending by trillions and balance the budget, but the first fiscal year of his second term tells a different story. The federal government spent more than $7 trillion for the fiscal year ending September 30, marking a $301 billion increase from fiscal year 2024, according to Congressional Budget Office data released this week.

The modest deficit reduction of $8 billion came primarily from increased tax collections rather than spending cuts. Revenue climbed by $308 billion, or 6%, while outlays rose by $301 billion, or 4%. The federal government still ran an $1.8 trillion deficit, roughly equivalent to 19 days of federal spending.

DOGE promises fall short

Trump’s Department of Government Efficiency, led initially by billionaire Elon Musk, claimed to have saved $205 billion through contract cancellations, grant terminations, and workforce reductions. However, independent analyses paint a different picture. NPR reported that some agencies are now rehiring workers and spending more than before DOGE interventions began.

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The disconnect between campaign promises and fiscal reality has drawn scrutiny from budget watchdogs. Trump initially suggested DOGE could cut $2 trillion from the federal budget before that goal was scaled back to $1 trillion, then to claims of $150 billion in savings that fact-checkers disputed.

Entitlements drive spending surge

The CBO report reveals where the money actually went. Social Security, Medicare, and Medicaid accounted for $245 billion in increased spending, driven by an aging population and rising healthcare costs. Defense spending jumped $38 billion, while the Department of Veterans Affairs saw a $41 billion increase largely attributed to healthcare facility costs.

Interest payments on the national debt rose by $80 billion compared to the previous fiscal year, reflecting both the growing debt and prevailing interest rates. These mandatory spending categories dwarf the potential savings from cutting discretionary programs like foreign aid or government contracts.

Political promises vs. budget math

During his 2016 campaign, Trump promised to eliminate the national debt over eight years. Instead, the debt now exceeds $36 trillion and continues climbing. His administration’s “One Big Beautiful Bill” projects deficit reduction through economic growth assumptions, but independent analysts remain skeptical of those projections.

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The Committee for a Responsible Federal Budget notes that addressing the deficit requires tackling healthcare spending, defense costs, and tax policy, not just eliminating waste and fraud. These major budget drivers enjoy strong political constituencies that make meaningful cuts politically challenging.

Can any administration meaningfully reduce federal spending without addressing entitlements, defense, and interest costs?

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