Federal Budget Over the Last 10 Years: Deficits, Debt, Interest

Over the federal budget’s last 10 years, spending nearly doubled from roughly $3.9 trillion in fiscal year 2016 to about $7 trillion in fiscal year 2025.¹ Revenue grew as well, but never enough to catch up, producing annual deficits that pushed total national debt past $38 trillion by the end of 2025.² Three forces did most of the work: pandemic-era emergency legislation, steady growth in Social Security and Medicare, and interest costs that now rival the defense budget.

Spending, Revenue, and Deficits Year by Year

The federal fiscal year runs from October 1 through September 30, so FY2025 covers October 2024 through September 2025.³ The figures below, in billions of dollars, capture the full decade.⁴

FY2016: Receipts $3,268, Outlays $3,853, Deficit $585
FY2017: Receipts $3,316, Outlays $3,982, Deficit $665
FY2018: Receipts $3,330, Outlays $4,109, Deficit $779
FY2019: Receipts $3,463, Outlays $4,447, Deficit $984
FY2020: Receipts $3,421, Outlays $6,550, Deficit $3,129
FY2021: Receipts $3,581, Outlays $7,250, Deficit $3,669
FY2022: Receipts $4,174, Outlays $6,011, Deficit $1,837
FY2023: Receipts $4,641, Outlays $6,013, Deficit $1,372
FY2024: Receipts $4,828, Outlays $6,187, Deficit $1,359
FY2025: Outlays approximately $7,010 (receipts not yet finalized at publication)

The decade breaks into three phases. From FY2016 through FY2019, outlays grew at a steady clip of about $200 billion per year, and deficits crept up but stayed below $1 trillion. FY2020 and FY2021 blew those trends apart. Then from FY2022 through FY2024, spending pulled back but settled around $6 trillion, well above the pre-pandemic baseline, while receipts climbed on the strength of the labor market and higher corporate profits. FY2025 outlays jumped back above $7 trillion, driven partly by rising interest costs and continued entitlement growth. That spending level, equal to roughly 23% of GDP, is higher than any non-pandemic year in modern history.

Where the Revenue Came From

Individual income taxes generated about 53% of federal receipts in recent years, followed by payroll taxes funding Social Security and Medicare, then corporate income taxes, with smaller streams from excise taxes, customs duties, and estate taxes.⁵

The Tax Cuts and Jobs Act of 2017 shaped the revenue side heavily. It lowered individual rates across most brackets and cut the corporate rate from 35% to 21%. Receipts dipped slightly in FY2018 before resuming growth as the economy expanded. The sharpest revenue jump came between FY2021 and FY2023, when strong employment, rising wages, and elevated corporate earnings pushed both individual and corporate collections up.

Many of the TCJA’s individual provisions were scheduled to expire at the end of 2025. That would have pushed five of seven brackets back to higher pre-2017 rates and roughly halved the standard deduction. The One Big Beautiful Bill Act, signed on July 4, 2025, extended the expiring provisions.⁶ The extension preserves the current rate structure and the revenue gap those lower rates create, which CBO estimates will contribute to deficits exceeding $1.9 trillion annually in coming years.⁷

Mandatory Spending Now Runs Two-Thirds of the Budget

The single most important structural fact about the modern budget is the split between money Congress votes on each year and money that flows automatically under existing law. Mandatory spending, the automatic category, totaled roughly $4.1 trillion in FY2024, with more than half going to Social Security and Medicare alone.⁸ These programs don’t require annual appropriations. Their costs are set by who qualifies and by benefit formulas written into permanent law.

Social Security accounted for roughly 21% of all federal outlays in FY2024, making it the single largest program in the budget. The retirement and survivor trust fund (OASI) is projected to cover full scheduled benefits through 2033. After that, incoming payroll taxes would support only about 77% of promised benefits unless Congress acts.⁹ Medicare cost $839 billion in FY2024 and continues to grow as healthcare prices rise and more of the baby boomer generation moves into retirement. Medicaid, income security programs, and federal employee retirement benefits fill out the mandatory category.

Together, these obligations have grown from around 60% of total outlays in the mid-2010s to closer to two-thirds today. Most of the budget is on autopilot before Congress debates a single appropriations bill.

Discretionary Spending Has Been Essentially Flat

Discretionary spending covers everything Congress approves through annual appropriations: the military, national parks, medical research, transportation, veterans’ health, education. The Fiscal Responsibility Act of 2023 set the most recent caps as part of a deal to raise the debt ceiling:¹⁰

FY2024: Defense $868 billion, non-defense $704 billion
FY2025: Defense $895 billion, non-defense $711 billion

Those caps allow roughly 1% annual growth, which barely keeps pace with inflation, and they extend through FY2027. Some spending is exempt, including $66 billion in FY2025 for the Infrastructure Investment and Jobs Act.¹⁰ The practical effect is that discretionary spending has been roughly flat in inflation-adjusted terms for most of the decade while mandatory spending and interest costs grow automatically. The portion Congress actually debates keeps shrinking as a share of the total.

The Pandemic Rewrote the Baseline

The most dramatic budget story of the past decade was the federal response to COVID-19. In about 13 months, Congress passed multiple emergency packages that injected trillions into the economy outside the normal appropriations process.

The CARES Act, signed in March 2020, authorized roughly $2.2 trillion in relief: direct payments to individuals, enhanced unemployment benefits, forgivable loans to small businesses through the Paycheck Protection Program, and a $150 billion Coronavirus Relief Fund for state and local governments.¹¹¹² The American Rescue Plan Act followed in March 2021, adding another $1.9 trillion for vaccine distribution, school reopenings, another round of direct payments, and expanded child tax credits.¹³ Smaller packages ran in between.

Total outlays jumped from $4.4 trillion in FY2019 to $6.6 trillion in FY2020 and $7.3 trillion in FY2021, while receipts barely moved.⁴ The resulting deficits of $3.1 trillion and $3.7 trillion in those two years accounted for a large share of the debt added over the entire decade. And the spending baseline never returned to pre-pandemic levels. Even after emergency programs expired, outlays settled above $6 trillion, partly because the pandemic accelerated healthcare spending growth and partly because higher debt meant higher interest costs going forward.

Deficits and the National Debt

When spending exceeds revenue, Treasury borrows the difference by selling bills, notes, and bonds. The accumulated total of that borrowing reached $38.4 trillion as of December 2025.²

The deficit path is straightforward. Pre-pandemic deficits rose from $585 billion in FY2016 to $984 billion in FY2019, reflecting the combination of tax cuts and steady spending increases. The pandemic then pushed deficits to $3.1 trillion in FY2020 and $3.7 trillion in FY2021. Deficits fell back to the $1.3 to $1.8 trillion range from FY2022 through FY2024 and now appear to be widening again. CBO projects a $1.9 trillion deficit for FY2026, growing to $3.1 trillion by 2036.⁷

The statutory debt limit under 31 U.S.C. § 3101 sets a legal ceiling on how much Treasury can borrow.¹⁴ The reconciliation law signed on July 4, 2025, raised the limit by $5 trillion to $41.1 trillion.¹⁵ Given projected deficits, Congress will face the debt ceiling again within a few years.

Interest Is the Fastest-Growing Line Item

The cost of servicing the national debt has become one of the most consequential items in the budget. Net interest payments reached $881 billion in FY2024, more than the government spent on defense that year. Net interest was roughly $240 billion in FY2016. That nearly fourfold increase happened because the debt grew by trillions while interest rates rose sharply from near-zero pandemic lows.

CBO projected net interest of approximately $952 billion for FY2025, and the trajectory keeps climbing as older low-rate debt matures and gets refinanced at current rates.⁷ Interest costs are now larger than any single discretionary program and approaching the size of Medicare. Unlike discretionary spending, interest cannot be trimmed through appropriations. It is a fixed obligation that grows with both the size of the debt and prevailing rates.

That creates a compounding problem. Deficits add to debt, debt generates interest costs, interest costs widen the deficit, and the cycle repeats. In FY2016, net interest consumed about 6% of the budget. By FY2024, it consumed roughly 14%. If rates stay elevated, CBO’s projections show this share continuing to rise, crowding out room for everything else the government funds. More than any single program or tax policy, that dynamic is what makes the federal budget outlook for the next decade fundamentally different from the last.

1
U.S. Treasury Fiscal Data. Federal Spending
2
Joint Economic Committee. National Debt Hits $38.40 Trillion
3
USAGov. The Federal Budget Process
4
The American Presidency Project. Federal Budget Receipts and Outlays
5
U.S. Treasury Fiscal Data. Government Revenue
6
Internal Revenue Service. One, Big, Beautiful Bill Provisions
7
Congressional Budget Office. The Budget and Economic Outlook: 2026 to 2036
8
Congressional Budget Office. Mandatory Spending in Fiscal Year 2024 – An Infographic
9
Social Security Administration. A Summary of the 2025 Annual Reports
10
Congress.gov. Exemptions to the Fiscal Responsibility Acts Discretionary Spending Limits
11
Congress.gov. HR 748 – 116th Congress – CARES Act
12
U.S. Department of the Treasury. Coronavirus Relief Fund
13
Congress.gov. HR 1319 – 117th Congress – American Rescue Plan Act of 2021
14
Office of the Law Revision Counsel. 31 USC 3101 – Public Debt Limit
15
Congress.gov. Federal Debt and the Debt Limit in 2025