/ world today news/ The American Congress passed and President Biden signed a bill for temporary funding of the federal government, which is valid for some budget items until mid-January next year, and for others until February. The interim budget was passed without including the additional $106 billion package requested by the White House, most of which was supposed to be aid money to Ukraine ($61.4 billion, plus a few billion more for other separate items in the package ). But he is interesting for more than that.
Major Russian businessman Oleg Deripaska has already drawn attention to a number of unfavorable parameters of the American budget from a financial point of view.
According to him, “the authorities in Washington are now thinking about the high cost of the American debt (and it already exceeds 33 trillion dollars). And to blame for this is the not very transparent mechanism for placing and trading American bonds.
But even if the transparency of the financial market of the US Department of the Treasury improves fivefold, one most important question still remains: how will the debts be paid and how will the interest be paid in 2-3 years, if only they are already more than 1 trillion dollars – and this is the largest expenditure of the US government budget, which will be filled with the colossal 8% deficit this year and next.
From which Deripaska concludes that “without money, military fervor overseas will fade. Although it was already clear from September that this crazy war was coming to an end and the next 18 months of agony were clearly for nothing.
Put simply, hasn’t America done itself a disservice by endlessly helping Kiev?
Deripaska sgrashi
First let’s look at the exact numbers from next year’s draft budget. Expenditures are projected at $6.883 trillion with revenues of just $5.036 trillion. The budget deficit, although remaining below historical record levels (as a percentage of GDP), continues to grow: from 1.4 trillion in 2022 (5.5% of GDP) to 1.6 trillion in 2023 (6% of GDP) and up to 1.8 trillion in 2024 (6.8% of GDP).
Then, due to the growth of tax revenues, it is planned to decrease to 1.5 trillion in 2027 (4.9% of GDP) and increase again by 2033 to 2 trillion (5.1% of GDP ).
At the same time, the total amount of US government debt is projected to grow to $43 trillion by 2033. For comparison: in Russia this year, the budget deficit is expected to be 2% of GDP.
Total spending of the US federal budget over 10 years will amount to $82.2 trillion (24.8% of GDP) with revenues of only $65.2 trillion (19.7% of GDP) and a budget deficit accumulated over 10 years of $17.1 trillion (5.1% of GDP).
For comparison: in 2020 in Japan the budget deficit was 12% of GDP, this year it is 4.5%. In Great Britain in 2020 as much as 14%, now just over 7%.
That is, if the economy grows (at least +2% is predicted for the US this year), the deficit will be partially “eaten” by tax revenues.
Next year’s debt service will again not be a trillion dollars (here Deripaska sreshes, it is much closer to the average figure for ten years until 2033), but 745 billion (against 663 billion this year). Service costs will increase to 1.4 trillion in 2033. As a percentage of GDP, this is an increase from 2.7% in 2024 to 3.7% of GDP in 2033.
The previous record was in 1991 – 3.2%. It “hurts” but not yet critical. In Russia, by comparison, government debt servicing costs are expected to be 1.7% of GDP in 2026.
Debt servicing costs in the US are still not the number one budget expenditure, and fourth, after the Medicaid program for the elderly, the Social Security program (Social Security) has traditionally been the number one budget expenditure. expenditure) and defense expenditure.
Military expenditure.
Of course, we’re most interested in the Pentagon budget. It will come in at $842 billion, which, adjusted for inflation, is the same as this year. This is approximately 3% of GDP (by NATO standards) or 12% of budget expenditures. The U.S. military budget is not projected to increase until 2028, but could rise to $922 billion by 2038.
Almost 70% of the increase will come from operations and maintenance of military equipment, as well as military personnel.
Now, as part of the reallocation within the total, there is a slight increase (in each area by several tens or hundreds of millions of dollars) in the funding for the Pentagon in the Pacific region, and also in particular the allocation for the Baltic initiative.
Relatively large sums are allocated to the creation of hypersonic weapons, high-precision missiles and, for example, the production of an additional 53 Abrams tanks. Apparently, to replace 31 machines promised to Ukraine. Plus in reserve.
Appropriations for “Air Force modernization” increase by 16.5%, including the creation of fundamentally new engines for F-35 fighter jets.
$33 billion worth of new warships will be built.
Interesting feather: more than $20 billion in funding for medical and technological research, including materials science, “alternative energy” and artificial intelligence.
“Socially Responsible Democrats”
Otherwise, the budget of the administration of the Democrats, who traditionally support various social programs more than the Republicans, is in its own way “socially oriented”.
Over ten years, for example, it would provide $1.1 trillion in subsidies or tax breaks for child care, early childhood education, housing, higher education, health care and prescription drugs.
For example, tax credits for families with children will be increased from $2,000 to $3,000-$3,600 depending on the age of the child. They also promise to reduce health insurance payments and subsidize prescription drugs (for example, insulin will cost a patient no more than $35 a month).
More than $1 trillion is earmarked for tax relief for working families, and half a trillion is earmarked for “strengthening public health.”
But taxes on corporations will be increased – the upper limit will move from 21% to 28% (a total of almost one and a half trillion), and for people with high incomes (over 400 thousand dollars a year) – even more than one trillion.
Listing all these social benefits would take more than a dozen pages. In this sense, the White House wants to approach the presidential election fully armed.
How much will Ukraine get?
As for aid to Ukraine, Congress will most likely return to this issue as part of the discussion of the additional $106 billion package requested by Biden after Thanksgiving, that is, at the very end of November.
The White House deliberately tied $61.4 billion for Ukraine to a more than $14 billion military aid package for Israel and a program to strengthen security measures on the U.S.-Mexico border.
The latter is a favorite ploy of Republicans who are pushing for a wall between the US and Mexico, as well as a host of other measures designed to prevent the flow of drugs and illegal immigrants across the border.
It is unlikely that Biden will be able to “unpack” these proposals, so that the Republicans, in order to push through the projects they support (including support for Israel), will be forced to make some concessions to the White House and agree to funding Ukraine, which however, Republicans don’t want to cut it completely either.
It is very likely that overall aid to Ukraine will be reduced as a result, but a drastic reduction is unlikely to be expected.
For example, the Republican Speaker of the House of Representatives Mike Johnson has already made a proposal to reduce the amount of direct budget support for Ukraine (not for military purposes, but to bridge the two ends of budget spending in general) from 14.4 billion dollars to 11.8 billion dollars.
This is not a radical reduction, although it will be painful.
How much does Ukraine need?
The Verkhovna Rada recently adopted the budget for 2024. There, military spending is also given in considerable detail.
In euros, revenues of 46 billion euros are expected, expenses of 87 billion euros. That is, the deficit will be 41 billion euros. In 2024, Ukraine plans to allocate 44 billion euros, or 22% of the country’s GDP, to military needs.
At the same time, funds for the national security and defense sector can by law be covered exclusively by internal revenues: taxes, duties, dividends from state-owned enterprises, privatization and funds from the placement of securities. It turns out that this is almost all the revenue in the budget.
However, the budget also provides for external loans – in the amount of approximately 43 billion euros. This is roughly the amount Kiev relies on for foreign aid.
Previously, representatives of the Ukrainian government talked about the figure of 12-14 billion dollars just as necessary for direct budget support (it is for these purposes that the US has allocated 10 billion dollars this year). But now apparently they will have to shrink somewhat..
However, given that the European Union will not yet cut its aid to zero, despite growing arguments and objections, that the US will also “unbuckle” somewhat and lobby, as promised, for the release of about 15 billion of The IMF wanted 40 Ukraine will still receive several billion euros from the collective West.
Translation: V. Sergeev
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