Without a pandemic to blame this time: US monthly deficit hits $432 billion, largest since March 2021

USA: The United States recorded its largest monthly budget deficit since March 2021 in July, with the shortfall reaching US$432.3 billion (S$553.5 billion), which is a 48% jump from the same period a year ago, as surging Medicare expenditures, mounting debt servicing costs, and tariff refunds continued to strain the federal balance sheet, the Treasury Department reported Wednesday.

The collective deficit across the first 10 months of the fiscal year has now risen to nearly US$1.8 trillion, surpassing the same period in 2025.

According to CNBC, Medicare was the single largest expenditure in July at US$174 billion, up sharply from US$103 billion in June and now running at US$955 billion for the full fiscal year. These figures are well ahead of Social Security at US$141 billion and net interest on the national debt at US$104 billion for the month.

Two additional factors inflated the July figure. Tariff refunds cost the budget US$33 billion as the administration continues providing rebates for levies the Supreme Court ruled illegal. A further US$99 billion in spending was accelerated into July because the first of the month fell on a nonbusiness day, pulling forward benefit payments including Medicare, Supplemental Security Income, and Social Security outlays.

For the full fiscal year to date, the US has paid US$1.17 trillion in interest on its US$39.9 trillion national debt, up from US$1.01 trillion in the same period a year ago. Net interest, which strips out interest the Treasury receives, totalled US$931 billion. Debt financing now ranks behind only Social Security and Medicare as a proportion of government expenditures for the year.

Netizens react

The figures drew pointed responses online, with several commenters placing the deficit in political context.

One noted the significance of the March 2021 comparison: “March of 2021 was during the COVID pandemic, a historic crisis out of anyone’s control. This is completely of the regime’s own making without outside forces.”

Another raised concerns about the broader fiscal constraints the deficit creates: “It also means that the government as a whole is going to be very constrained in dealing with inflation. Hard to raise rates when doing so is going to massively increase the deficit, and thus the amount you have to print to cover interest.”

Others focused on the cumulative toll of the administration’s policy choices. “Trump has drained our treasury, our munitions, the strategic oil reserve; America’s greatest threat is clearly in the White House,” one Redditor wrote. Another added: “This administration is gonna leave us with nothing once they are gone. Just watch. There will eventually be no more money for programs to help Americans.”

Read also: Trump says new tariffs achieve same goal as Supreme Court-rejected duties, calls current method ‘more cumbersome’