For the first time since 2005, the federal budget posted a surplus this June, and Uncle Sam has President Donald Trump‘s tariffs at least partially to thank.
The budget surplus of $26 billion is essentially a rounding error relative to our current annual deficit of $1.3 trillion for the first nine months of fiscal 2025. But the Congressional Budget Office data is still evidence that, on the margins, Trump’s cost-cutting measures at the Department of Government Efficiency, his tariffs, and real wage growth unleashed by his deregulatory agenda are indeed trimming the trajectory of our debt growth every so slightly. All in all, the deficit thus far in fiscal 2025 is 1% smaller than the first nine months of fiscal 2024.
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The 1.2% increase in real wages since Trump took office has translated to a 7% increase in total individual income and payroll tax revenue compared to the year prior. Customs duties collections are up 89% for the fiscal year, but a staggering 279% from just June 2025 compared to the June prior.
Mandatory spending continues to plague the Treasury. The “one big, beautiful bill” may slow down the 7% increase in Medicaid spending, but Trump has pledged not to touch Social Security or Medicare, which saw their spending increase by 9% and 7% respectively this year. These three categories consume three-fifths of every single dollar collected by the federal government.
REAL WAGES UP, INFLATION DOWN SINCE TRUMP TOOK OFFICE
But DOGE has made a dent, as far as discretionary spending goes. The Department of Education has slashed its spending by half since last year, shelling out $102 billion less than it did through June of the last fiscal year.
All of this is obviously before the great, the OK, and the ugly of the “one big, beautiful bill” goes into effect, and unfortunately for debt hawks, Trump’s second signature piece of tax legislation front-loads all of the deficit spending while waiting some years for major revenue raisers and spending cuts to kick in. But Trump 2.0’s early track record indicates that the growth rate of the economy may indeed exceed what economists have expected.