Updated: The White House pulled back an order on Wednesday that froze trillions of dollars in federal grants and loans.
Federal grants has been paused earlier, as per a memo from the Office of Management and Budget. This meant freezing some key elements that were once core to the U.S. federal spending.
In her first White House briefing Press Secretary Karoline Leavitt had said, “This is not a blanket pause on federal assistance and grant programs from the Trump administration”. She said all agencies could make a case to the administration to keep their funding.
A follow-up OMB guidance later clarified that the pause will not affect specific aid programs including Medicaid, Supplemental Nutrition Program, federal student loans, rental assistance, and aid to small businesses and farmers.
Advisory-GR-Additional_OMB_Guidance_1-28-25
According to the guidance the the freeze was for any grants or loans that were running against President’s Executive Orders on immigration, abortion, foreign aid, clean energy, diversity, equity and inclusion programs and gender ideology along with the funding of non governmental organizations.
States depend heavily on federal funding for essential services like healthcare, education, income security, and infrastructure.
In 2023, federal grants to state and local government amounted to $1.1 trillion, which was 18% of all federal spending. While Medicaid was the largest share, with $616 billion payments, income security followed next with $167 billion which included supplemental nutritional program and payment to support children and other related programs.
We take a deep dive into the data from the U.S. Treasury to explain visually the U.S. deficit over the past few years and the federal spending by category and department for the fiscal year 2024.
Historical Perspective on Federal Deficit
The last time there was a federal surplus, the year was 2001.
Since then, the spending as exceeded revenues. Deficits after 2001 were due to different reasons—the most prominent amounting to $3.3 trillion in 2020 due to the pandemic.This was largely driven by the increased government spending for relief measures and rescue loans provided to small businesses that suffered from the lockdowns.
Prior to that, the response to the 2008-9 financial crisis for economic stability only widened the gap between spending and revenue leading to big deficits.
Key Spending—by Categories and Agencies in Fiscal Year 2024
Data from USASpending shows the top ten spending categories for fiscal year 2024. Roughly 25% of total spending of $9.7 trillion went to the Department of Health and Human services.
As of Jan. 28, 2025, this share has only increased to 28.2% in 2025.
A further breakdown of the above categories shows where the federal spending goes when it comes to detailed spending.
Medicare and social security are amongst the top five categories where U.S. government spends the most. Net interest follows after and due to the rising cost of debt, this value has only increased since it is interest rate sensitive.
Up next: a break down of U.S. Federal Debt