The U.S. government’s fiscal deficit ballooned to $291 billion in July, a nearly 20% jump from the previous year, triggering sharp criticism from prominent economic and political commentators.
Economist Peter Schiff mocked President Donald Trump‘s assertion of a “booming” economy in light of the soaring deficit, while former Congressman Ron Paul questioned the fundamental point of his election, framing the data as a failure to deliver on promises of smaller government.
U.S. Government Deficit Swells To Nearly $300 Billion
The latest report from the U.S. Treasury Department revealed the stark gap between government income and spending. In July, the government collected $338 billion in total receipts but spent $630 billion, creating the massive monthly shortfall.
The deficit grew despite a surge in revenue from tariffs, which tripled year-over-year to nearly $28 billion. For many critics, this signals a runaway spending problem that tariffs cannot contain.
Schiff, a frequent critic of U.S. fiscal and monetary policy, argued the rising deficit is a clear sign of economic trouble, not strength. He noted that other than a month with heavy COVID-related stimulus spending in 2021, this was the largest July deficit on record.
“Trump claims the U.S. economy is booming. But a booming economy results in lower, not higher, deficits,” Schiff stated in another X post. “Deficits rise when the economy is weak. The truth is the U.S. economy is cooling fast, so deficits will keep rising and be much higher during the next official recession.”
The ‘Goal Of Electing Donald Trump’?
The data also drew a sharp rebuke from former Congressman Ron Paul, who pointed out the contradiction between the administration’s tariff income and its growing debt.
“President Trump repeatedly tells the American people that the government is taking in lots of cash from tariffs. But the same government is going further into debt and racking up deficits with a Big Beautiful Bill,” Paul wrote. He then posed a pointed question reflecting his view of a broken promise: “Wasn’t the goal of electing Donald Trump to cut the government down in size?”
What Inflated The Deficit?
While tariff revenue has increased, a Reuters report highlighted that these gains are being dwarfed by mandatory spending growth. For the first ten months of the fiscal year, costs for major healthcare programs like Medicare and Medicaid rose by $141 billion, while Social Security costs grew by $108 billion.
Perhaps most alarmingly, interest payments on the national debt continue to climb, topping $1.01 trillion for the ten-month period—a 6% increase from the prior year due to higher debt levels and interest rates.
Warren Buffett’s 5-Min Deficit Solution
As Washington grapples with the numbers, a decades-old clip of investor Warren Buffett has gone viral, presenting a simple, if radical, solution. In the video, Buffett says he could end the deficit in five minutes.
“Just pass a law that says that anytime there's a deficit of more than 3% of GDP,” Buffett said, “all the sitting members of Congress are ineligible for re-election.”
Price Action
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, were higher in premarket on Wednesday. The SPY was up 0.22% at $644.09, while the QQQ advanced 0.29% to $581.74, according to Benzinga Pro data.
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