2023-10-20 20:11:29
The US budget deficit has widened over the past year as businesses and households have paid less in taxes, while the cost of debt has risen, complicating Joe Biden’s task a year from now of the presidential election.
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The deficit climbed 23% in fiscal year 2023, which ended September 30, compared to fiscal year 2022, and reached $1.695 billion, the Treasury Department announced Friday.
Federal government spending certainly fell by 2.0% last year.
But revenues fell even harder, plunging 9.0%. Particularly at issue: revenues from taxes paid not only by businesses, but especially by households, by far the primary resource of the federal state.
On the spending side, the federal state suffered in 2023 from the rise in interest rates: its debt cost it much more than the previous year.
This means that $879 billion in interest was paid out, or $162 billion more than in 2022.
Listen to Luc Lavoie’s analysis on Alexandre Moranville-Ouellet’s microphone via QUB radio :
The drop in tax-related revenue underscores “the importance of policies adopted or proposed by President Biden to reform the tax system,” the Democratic administration said in a statement.
Joe Biden is in favor of making the richest Americans and big businesses pay more taxes, but these measures are mostly opposed by Republican opposition.
“President Biden’s economic plan builds an economy that grows the middle class, while reducing the deficit by ensuring that the wealthy and big businesses pay their fair share,” assured the director of the House Budget Office -Blanche (OMB), Shalanda Young, in this press release.
Faced with the drop in tax revenues, the Biden administration also pointed the finger of blame for Donald Trump’s 2017 tax reform.
These revenues returned “to low levels in 2023, consistent with projections made after the adoption of the 2017 law”, a decline which “was the main driver of the increase in the deficit as a proportion of GDP”.
The deficit represents 6.3% of gross domestic product (GDP), compared to 5.4% last year.
The former Republican president is currently considered the main competitor to Democrat Joe Biden for the presidential election of November 2024.
2024 budget blocked
These figures come at a time when US spending and debt are already the subject of a fierce political battle between Republicans and Democrats.
The 2024 budget is blocked due to disagreements over spending.
And an agreement is impossible at this stage, the House of Representatives having been without a president for two weeks, due to divisions between moderate Republicans and Trumpists.
However, there is barely a month left for both camps to escape a paralysis of the federal state, or “shutdown”, narrowly avoided the first time in September.
Already in June, the two camps had signed an agreement at the last minute to avoid a payment default. Joe Biden had committed to limiting certain spending in order to keep it stable, excluding military spending, in 2024 and increasing by 1%, excluding inflation, in 2025.
He also agreed to cut $10 billion in funds allocated to tax services to modernize and strengthen controls.
In 2022, the United States budget deficit was cut in half compared to 2021.
The end of aid measures linked to Covid-19 had made it possible to reduce spending, while the recovery of the American job market had increased revenue from income tax, by far the primary resource of the federal state.
The deficit reached a historic record in 2020, exceeding 3,000 billion, due to expenses linked to the COVID-19 health crisis.
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