- Elon Musk’s cost-cutting efforts at the Department of Government Efficiency have yet to reduce the federal deficit overall; it more than doubled month on month in February to over $1.1 trillion for FY 2025. Meanwhile, concerns grow over America’s soaring debt-to-GDP ratio, projected to reach 166% by 2054, as President Trump’s proposal to sell “gold cards” to wealthy immigrants faces skepticism due to the limited pool of eligible buyers.
Elon Musk has framed his cost-cutting initiatives at the Department of Government Efficiency (DOGE) as a project that will halve the federal deficit with “competency and trust.”
But in February (President Trump’s first full month in the Oval Office), data from the Treasury shows, the monthly deficit more than doubled compared to the period prior, now sitting comfortably at more than $1.1 trillion for FY 2025 so far.
In February, outlays for the government totaled $603 billion, a fall compared to January’s total of $642 billion.
However, this was offset by a massive drop in income, which fell from $513 billion to $296 billion. As a result, the deficit for the month sat at over $307 billion, an increase of approximately 139% on January’s imbalance of $128.6 billion and approximately a 4% increase on the same month last year.
The data raises questions for President Trump’s cost-cutter-in-chief, Tesla CEO Musk, who is tasked with axing the federal deficit from $2 trillion to $1 trillion a year.
An optimist might suggest this target can still be hit if the government starts operating at a surplus, as it did in September and April last year.
A realist might suggest that maintaining a break-even or surplus federal balance sheet might be increasingly difficult in an increasingly cautious and volatile trading environment.
Looking at the particulars of February’s deficit, the greatest increase in outlays for the government came in the form of income security payments, which rose to $105 billion. That being said, for the year-to-date, the government’s biggest outlays are Social Security and Medicare.
Conversely, the income streams the shrunk most notably in February were social insurance and retirement receipts, as well as individual income taxes.
As UBS’s chief economist, Paul Donovan, wrote in a note seen by Fortune this morning: “Much global economic uncertainty originates with U.S. trade policies and government cuts. However, the government cuts have mainly reduced job security and efficiency to date—government spending rose 7% [year-on-year] in February.
“The risk is that sentiment or ‘animal spirits’ is being damaged without any fiscal savings.”
Uncertainty is the word of the week across Wall Street with JPMorgan Chase CEO Jamie Dimon, who previously was fairly agnostic on tariffs, saying that White House policy is prompting caution.
“I don’t think the average American consumer who wakes up in the morning and goes to work…changes what they’re going to do because they read about tariffs,” Dimon told a Washington, D.C., summit on retirement hosted by BlackRock and the Bipartisan Policy Center this week.
“But I do think companies might. Uncertainty is not a good thing.”
Why is everyone worried about national debt?
Reducing the federal deficit on a year-by-year basis is an exercise economists widely agree needs to happen. Their main concern is the remaining $36.2 trillion Uncle Sam owes to foreign nations, accumulated over decades prior.
What has experts so worried isn’t the debt itself; in fact, trading in government debt is the entire basis of the vital bond market and provides a basis for the global economy. Rather, it’s America’s debt-to-GDP ratio.
This ratio is, in its simples form, the amount America owes in comparison to the value of its output and hence, how capable it is to repay its debts.
In 2013, Amercia’s debt went beyond the 100% value of what it produces and has since risen to 122% of GDP, per the St. Louis Fed.
This balance is set to tip even higher, made worse by the increasing burden of interest payments required to service the debt. The Congressional Budget Office (CBO)expects the ratio to reach 166% of GDP in 2054 and “remain on track to increase thereafter.”
Trump has previously suggested foreign visas could help fill the hole. Last month, he told the public to “remember the words ‘gold card.’”
His plan consists of charging rich immigrants $5 million for a card—which would have green card privileges “plus a route to citizenship.”
The proceeds could go toward national debt, Trump added: “A million cards would be worth $5 trillion, and if you sell 10 million of the cards that’s a total of $50 trillion. Well, we have $35 trillion in debt, so that would be nice.”
However, as Fortune previously reported, for President Trump to hit his 10 million sales target he would need to attract nearly half the world’s millionaire population to purchase a card—and the majority are already in the U.S.
According to a Capgemini study released last year, there were 22.8 million millionaires across the globe in 2023—an increase of 5.1% from the year prior. However, approximately 7.4 million of those high-net-worth individuals are already U.S. citizens, meaning the White House would have to attract the vast majority of the remaining pool. On top of that, mere millionaire status is not enough to buy a gold card—a single person would need to be worth at least $5 million, and more if they wanted to bring a partner or children.
