US Fiscal Deficit Spiraling: Musk Says 'Government is Hopeless'

Article Summary

• The US fiscal deficit for October exceeds expectations, hitting a new record.
• Rising interest payments are a significant burden on the federal budget.
• Elon Musk strongly criticizes the US government's financial management.

Back in February, many institutions had already "predicted" that Elon Musk's attempt to use the Department of Government Efficiency (DOGE) to "force" the US government to improve efficiency was doomed to fail, despite the noble intentions.

Simply put, Musk's pursuit of streamlining government agencies is commendable, but Congress ultimately holds the cards. And in the US Congress, maintaining the status quo is the eternal theme.

As expected, things remained the same, and it took the world's richest man a few months to realize this. While the media is still arguing about whether the Department of Government Efficiency is technically still "alive" within the Trump administration, the US has reverted to its old ways of reckless spending after that "heroic" start in early 2025, and it seems to be even worse this time.

Earlier, the US Treasury Department released budget data for October, and the results were grim. Of course, it wasn't all bad: tax revenues were relatively strong, totaling $404 billion, including $217 billion from income tax and $128 billion from Social Security income.

In fact, US government revenue grew by a solid 23.7% compared to the $326.8 billion collected in October 2024. This is due to the steady contributions that Trump's tariff policies now bring in monthly, which added $31 billion to the US Treasury in October.

As always, government spending was at the heart of the problem. Total spending in October amounted to $688.7 billion, equivalent to spending over $22 billion per day, which is a 17.9% increase from the $584.2 billion spent in the same period last year. This comes exactly when observers thought the US was making some slight progress in balancing revenues and expenditures.

The combination of these two figures resulted in a deficit of $284.4 billion in October, which is not only higher than the $257.5 billion deficit last October but even surpassed the historic record of $284.1 billion set in October 2020 due to the COVID-19 pandemic.

The US is currently in the first month of fiscal year 2026, meaning that it has just recorded the worst start to an annual budget deficit in US history. In other words, regardless of the official rhetoric, the Department of Government Efficiency has completely shut down.

Upon scrutinizing the reasons for the massive budget deficit in October, you will find the same "old faces": spending increased in all major categories in October, but the most shocking is the relentless rise in total US interest payments, which have reached $1.24 trillion over the past 12 months and are rapidly approaching Social Security spending ($1.589 trillion over the past 12 months), soon to become the largest source of government spending.

Total interest payments in October reached a record high of $104.4 billion, the highest ever for that month, and with interest payments of $1.24 trillion over the past 12 months, this means that 24 cents of every dollar collected in taxes goes to pay off debt interest.

In the brief period of "irrational hope" in early 2025, some saw a glimmer of hope in Musk's insistence on the Department of Government Efficiency and his efforts to cut spending, believing that there might be some way (albeit a very painful one) out of this "Minsky moment".

Now, the US has not only returned to square one but is also back on the fast track to a debt deadlock, and the US financial situation has never been worse, no wonder Musk exclaimed in a recent public comment: "This government is hopeless."