U.S. Budget Deficit Hits Five-Year High in July, Alarming Conservative Economists
Key Takeaways
- •The U.S. government recorded a $432 billion budget deficit in July, the largest July deficit ever, as spending of $766 billion dwarfed $334 billion in collected revenue.
- •Prominent conservative analysts who supported Trump in 2024, including Heritage Foundation member E.J. Antoni, have publicly broken with the administration over the worsening fiscal outlook.
- •Rising Medicare costs tied to an aging population were a primary driver of the spending surge, while $33 billion in tariff-related refunds further reduced revenue.
- •The One Big Beautiful Bill Act is projected to add $4.6 trillion to the deficit over ten years, with the wealthiest one percent estimated to pay at least one trillion dollars less in taxes during that period.
- •Direct costs from the war with Iran reached approximately $37.5 billion by late July, with broader economic analyses estimating the total taxpayer burden between $130 billion and $150 billion when factoring in energy prices, inflation, and borrowing costs.
The U.S. budget deficit surged to its highest level in over five years in July, drawing sharp criticism from conservative economic analysts who supported President Donald Trump in the 2024 election — a notable public break from the president's own coalition on an issue where fiscal discipline has been a longstanding conservative priority.
Geiger Capital, a pseudonymous conservative market analyst who voted for Trump in 2024, noted the stark imbalance on social media. "In the month of July, the US Government collected $334 Billion," the analyst wrote. "Just one problem… They spent $766 Billion. A $432 BILLION deficit. In one month." (X post)
E.J. Antoni, a self-described "America First Economist" and member of the Heritage Foundation, echoed those concerns. "56 cents of every dollar that the gov't spent last month was borrowed," he wrote on X. "The cumulative deficit for the first 10 months of this fiscal year is $23 billion larger than the total deficit for the entirety of the previous fiscal year — headed in the wrong direction while knocking on $40 trillion in debt." He added: "Interest on the debt was a whopping $118 billion in Jul, or ~63 percent of all personal and corporate income taxes collected last month. Absolute insanity." (X post)
The rising interest burden Antoni highlights reflects a structural challenge: as total debt grows, servicing costs consume a larger share of federal revenue even before accounting for new spending, a dynamic the Congressional Budget Office has repeatedly flagged as unsustainable over the long term.
According to Bloomberg, the record shortfall is "due to an acceleration in federal spending." After adjusting for calendar-year differences, the gap is tracking 5 percent wider than the previous year, representing the biggest July deficit ever recorded. Dramatically increased Medicare spending played a major role in the surge, reflecting the cost pressures of an aging U.S. population that have made mandatory spending programs the fastest-growing component of the federal budget. Additionally, $33 billion in losses stemmed from refunds related to Trump's tariffs. Overall revenue declined by an adjusted $12 billion.
Multiple Trump administration policies have contributed to the growing deficit. The One Big Beautiful Bill Act is projected to add $4.6 trillion to the deficit over ten years. According to the Institute on Taxation and Economic Policy, "the wealthiest 1 percent are slated to pay at least a trillion dollars less in taxes than they would have if Congress and the President had done nothing" over that period.
The cost of the war with Iran has further strained federal finances. Direct conflict costs reached approximately $37.5 billion as of late July, with the Trump administration requesting an additional $70 billion. According to Barron's, military spending "was up 3 percent in May, 5 percent in June, and now stands at 6 percent higher fiscal year to date." Broader economic analysis from the Center for American Progress places the total taxpayer burden between $130 billion and $150 billion when factoring in surging energy prices, inflation, and elevated borrowing costs.
