The issue of the U.S. fiscal deficit has drawn widespread attention in 2025. According to the latest report from the Congressional Budget Office (CBO), the fiscal deficit for this year is projected to reach $1.865 trillion, accounting for 6.2% of GDP. This figure represents the highest level in the past decade, highlighting the challenges faced by the federal government amid slowing economic growth and policy implementation.
In recent years, increased infrastructure investments and rising social security expenditures have exacerbated fiscal pressures. Particularly, post-pandemic economic stimulus programs and infrastructure bills have further widened the fiscal gap. However, tax revenue growth has failed to keep pace with spending due to high inflation, which has eroded consumer purchasing power, resulting in limited growth in consumption tax revenue.
Increased infrastructure investments and social security expenditures are driving government fiscal pressures to new heights. (Image: Retrieved from Pexels)
While the U.S. economy experienced slight growth in the second half of 2024, it remains constrained by challenges such as global supply chain disruptions, energy price fluctuations, and geopolitical instability. Meanwhile, the Federal Reserve's high-interest-rate policy aimed at controlling inflation has increased financing costs for businesses and households, further dampening economic activity.
The CBO report also highlights that the rapid growth of healthcare and social security expenditures will exacerbate fiscal pressure in the next decade. Experts suggest that to address this issue, the government should expedite tax reform by increasing rates for corporations and high-income groups to boost revenue. Simultaneously, cutting non-essential expenditures and improving the efficiency of fiscal spending are critical measures.
Despite these challenges, the U.S. maintains competitive advantages in areas such as technological innovation and energy transition. If the fiscal deficit issue is effectively managed, the U.S. economy could achieve sustainable growth.
