Game Over DOGE: US Starts Fiscal 2025 With Record Budget Deficit, Shocking Interest Expense
It was back in February, when we explained to Elon Musk why his strategy to shock the US government into spending "efficiency" through DOGE, while noble, is ultimately doomed to wit: "What Musk is doing in trying to streamline the govt is admirable but ultimately it will be Congress that decides the endgame. And there things are as status quo as always."
Status quo it was indeed, and it took the world's richest man several months to realize it, and while there has been a heated fight in the press whether DOGE is still technically active inside the Trump admin, we have some bad news: after a valiant start to 2025, the US has regressed to its old drunken-sailor spending ways… and has seemingly done so on steroids.
Earlier today, the Treasury published the October budget data, and it was ugly. Not all of it, mind you: tax receipts were actually quite solid: at $404 billion, consisting of $217 billion in income taxes and $128 billion in social security receipts…
… government revenues were actually a solid 23.7% improvement to the $326.8 billion collected in October 2024. Of course, that includes the now solid monthly contribution from Trump's tariffs which in October added $31 billion to the tally.
As usual, it was government spending that was the problem again, and at $688.7 billion, or over $22 billion per day, the October total was a 17.9% jump compared to the $584.2 billion spent a year prior. And just when the US was making some modest progress on merging the red (spending) and green (revenue) lines.
The combination of these two numbers resulted in a $284.4 billion deficit for the month of October, which was not only higher than the $257.5 billion deficit last October, but also higher than the record covid budget buster of $284.1 billion in October 2020!
And since we are now (only) one month in fiscal 2026, we now have the worst budget-deficit start to a fiscal year in US history.
In other words, no matter what the official line is, DOGE has left the building.
Taking a closer look at the causes of the October budget-busting deficit reveals the same usual suspects: spending across all major categories increased in October, but the most dramatic one was once again the relentless surge in the gross US interest, which is now a record $1.24 trillion in the last twelve months, and is rapidly approaching social security ($1.589 trillion LTM) as the largest source of government spending.
And here is the punchline: October gross interest was a record $104.4 billion, the highest for the month on record…
… and at $1.24 trillion in LTM interest expense, it means that 24 cents of every dollar in collected taxes goes to pay interest on the debt.
Bottom line: after a brief period of irrational hope in early 2025 when Musk's obsession with DOGE and cutting spending gave the US some hope that there just may some – very painful – way out of this Minsky Moment, we are not only back at square zero one and back on the fast-track to the debt-death of the United States, but the US fiscal picture has never been worse!
No wonder why in a recent public commentary, Musk fully agrees with us: the government is unfixable.
🚨ELON MUSK: "I haven't been to DC since May. The government is basically unfixable. I applaud David (Sacks') noble efforts…but at the end of the day if you look at our national debt…if AI and robots don't solve our national debt, we're toast." pic.twitter.com/XKSes4fBfq
— Autism Capital 🧩 (@AutismCapital) September 10, 2025
Tyler Durden
Tue, 11/25/2025 – 21:25