The Wall Street Journal (WSJ) reported on October 9 (local time) that although the U.S. federal government more than doubled its tariff revenue in fiscal year 2025 compared to the previous year, for the first time in history, interest payments on the national debt surpassed $1 trillion (approximately 1,421 trillion won).
According to the U.S. federal government’s revenue and expenditure estimates for fiscal year 2025, released the previous day by the Congressional Budget Office (CBO), tariff revenue reached $195 billion.
Although this figure more than doubled from the previous year, the increase from fiscal year 2024 was relatively modest because tariff rates were only significantly raised starting in April. Tariff revenue accounted for 3.7% of total federal government revenue, a much lower proportion compared to individual income tax, which made up 51%.
Net interest payments on public debt reached $1.029 trillion, surpassing $1 trillion for the first time ever. This amount increased by about 8% ($80 billion) from the previous year, due to both a rise in public debt and higher interest rates. This figure exceeded spending on Medicare, the public health insurance program, as well as defense spending.
Excluding a $131 billion decrease in non-cash expenditures resulting from revisions to the student loan program, non-interest expenditures were estimated to have increased by $351 billion. This was due to an 8% rise in spending on Social Security, Medicare, and Medicaid (medical assistance for low-income individuals), respectively.
As a result, the U.S. federal government’s fiscal deficit for fiscal year 2025 was estimated at $1.8 trillion, nearly the same as the previous year.
Previously, Elon Musk, CEO of Tesla, who led the Department of Government Efficiency (DOGE) at the start of the Trump administration, stated that government budget spending could be reduced by $2 trillion. However, the WSJ assessed that the impact was minimal.
The fiscal deficit as a percentage of gross domestic product (GDP) decreased slightly from 6.4% in fiscal year 2024 to 5.9% in fiscal year 2025. The ratio of public debt to GDP approached 100%, and is expected to surpass the 106% recorded in 1946 within the next few years.
Meanwhile, U.S. Treasury Secretary Scott Bessent stated at a regional bank conference on October 9 that the current fiscal deficit ratio to GDP has fallen to the low 5% range.
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