At the beginning of the new fiscal year, the US government faces a more "severe" budget deficit in healthcare expenditures.

The US budget deficit has further widened at the beginning of this fiscal year, mainly due to a slowdown in the rise of debt interest costs and an increase in healthcare and defense spending. Data released by the US Treasury Department on Wednesday showed that, after adjusting for calendar differences, the fiscal deficit in October was $121 billion. An official said that this figure increased by 89% compared to October last year, but after considering the impact of deferred income tax revenue flowing into 2023, the increase was only 22%. These data suggest that those who have promised to control US debt will face a huge challenge. President-elect Donald Trump has commissioned Elon Musk and Vivek Ramaswamy to research methods to cut expenses. Data released on Thursday showed that most expenditures are in politically challenging areas. The main drivers of the widening deficit include increased spending in the Department of Health and Human Services and the Department of Defense, which increased by 12% and 13% respectively after adjusting for calendar differences. Compared to the same period last year, healthcare expenditure alone increased by $62 billion. In contrast to trends over the past period, the debt servicing costs of the US Treasury Department only slightly increased in October. Net interest costs in October totaled $80 billion, compared to $76 billion in the same period last year. This burden reached its highest level in 28 years in the 2024 fiscal year, a byproduct of the significant rate hikes by the Federal Reserve in recent years. However, the Fed's success in reducing inflation is now paying off in one way: the Treasury Department does not have to pay as much for debt linked to inflation. Treasury Inflation-Protected Securities (TIPS) not only pay regular interest to investors like other notes and bonds, but also provide compensation for rising consumer prices. This means that when the Consumer Price Index (CPI) increases, the federal government's interest costs also rise. Now with low inflation, these expenditures are decreasing. As of the end of September, the weighted average interest rate on outstanding debt was 3.30%, near a 15-year high but slightly lower than the previous month, marking the second consecutive month of decline. Tax revenues were unusually high in October last year, as deferred income tax revenue was received from companies and individuals affected by disasters such as California wildfires. A Treasury Department official said that taking this into account, this year's October budget deficit will increase by 22%.