❓WHAT HAPPENED: The federal government’s budget deficit significantly shrank over the second quarter of the fiscal year, according to data released by the U.S. Treasury Department, suggesting the U.S. fiscal situation will continue improving.
👤WHO WAS INVOLVED: President Donald J. Trump, Treasury Secretary Scott Bessentt, and the U.S. Treasury Department.
📍WHEN & WHERE: Bessent highlighted the data on Wednesday, October 17, as part of the Treasury Department’s Monthly Treasury Statement.
💬KEY QUOTE: “The budget deficit began to shrink dramatically beginning in the second quarter of this year when there was no overlap with the Biden administration. From April to September, the cumulative deficit totaled just $468 billion. This is the lowest reading since 2019 and is down nearly 40 percent from the comparable period last year when Biden was spending recklessly.” — Secretary Bessent
🎯IMPACT: The Treasury Department contends that if tariff revenues and current fiscal restraint measures are maintained, the federal government’s deficit-to-GDP ratio will fall below four percent, a number largely seen as acceptable in terms of an annual fiscal loss.
The federal government’s budget deficit significantly shrank over the second quarter of the fiscal year, according to data released by the U.S. Treasury Department. Fueled by increased government revenues, including historic levels of money coming into the Treasury Department from President Donald J. Trump’s tariff policies, the second quarter deficit reading was the lowest in over half a decade.
“President Trump is taking control of unwieldy government spending to get the U.S. fiscal house in order. In response, financial markets have cheered the President’s accomplishments, with benchmark Treasury yields making new intra-year lows,” Treasury Secretary Scott Bessent said on Wednesday, noting: “The budget deficit began to shrink dramatically beginning in the second quarter of this year when there was no overlap with the Biden administration. From April to September, the cumulative deficit totaled just $468 billion. This is the lowest reading since 2019 and is down nearly 40 percent from the comparable period last year when Biden was spending recklessly.”
The budget deficit began to shrink dramatically beginning in the second quarter of this year when there was no overlap with the Biden administration. From April to September, the cumulative deficit totaled just $468 billion. This is the lowest reading since 2019 and is down… pic.twitter.com/6L7HslW03c
— Treasury Secretary Scott Bessent (@SecScottBessent) October 22, 2025
The overall budget deficit for the 2025 fiscal year was $41 billion below last year’s total, though the federal government still added $1.77 trillion to the national debt, which remains a serious economic and political concern. However, the Treasury Department points to other government data showing a considerable improvement in federal outlays, which are largely outpaced by revenue, suggesting the U.S. fiscal situation will likely continue improving. In the second quarter, federal outlays rose by just 0.2 percent compared to the previous year, while in the third quarter, government spending fell by 2.5 percent.
Last month, the federal government reported a budget surplus of $198 billion, a nearly $118 billion increase from the $80 billion surplus widely touted by the former Biden government for September 2024. The Treasury Department contends that if tariff revenues and current fiscal restraint measures are maintained, the federal government’s deficit-to-GDP ratio will fall below four percent, a number largely considered acceptable for an annual fiscal loss.
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