“The increase in revenue in 2021 can be largely attributed to the rise in income of individuals and businesses,” said the Treasury department in its statement. (Photo: 123RF)
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Washington – The U.S. budget deficit narrowed in 2021, after its all-time high in 2020, as the economic recovery helped fill the coffers. The Biden administration sees this as the result of its policy, and an additional argument in favor of its investment plans.
The deficit stood at US $ 2.772 billion for the 2021 fiscal year, ended September 30, the Treasury Department said on Friday.
This is US $ 360B less than last year, and this represents 12.4% of gross domestic product (GDP), up from 15% in 2020.
It’s also better than expected, since the initial projections were for a deficit of $ 3.669 billion, while the halfway projections were $ 3.114 billion.
In 2020, the economic crisis caused by COVID-19 had pushed the US deficit to an unprecedented level of US $ 3.132 billion as a result of the payment of stimulus checks, unemployment benefits, and loans. small and medium-sized enterprises.
It was even more than double the previous record, recorded in 2009, when, in the midst of a recession linked to the financial real estate crisis, it had climbed to US $ 1.4 trillion.
“Increased income”
“The increase in revenue in 2021 can be largely attributed to the rise in income of individuals and businesses,” said the Treasury department in its statement.
The economic recovery accelerated in the spring in the United States, with the vaccination campaign. Business activity has increased, particularly in the sectors most affected by the crisis – catering, tourism, etc. – increasing their profits and therefore the amount of their taxes.
And many people who had lost their jobs with the crisis have returned to work and therefore received a salary, taxable, when unemployment benefits are only partially.
It is thus 4.046 billion US dollars which entered the coffers of the American federal state between October 1, 2020 and September 30, 2021, 600 billion more than in 2020.
This represents 18.1% of GDP, against 16.3% in 2020.
Expenditures were $ 6.818 billion (30.5% of GDP), an increase of US $ 266 billion compared to 2020. This represents 30.5% of GDP, a lower share than the 31.3%. % last year.
“Fragile” economic recovery
This improvement in the country’s finances “is further proof that the US economy is recovering,” said Treasury Secretary Janet Yellen, quoted in the press release.
“Although the country’s economic recovery is stronger than that of other rich countries, it remains fragile,” she warned, however.
This new appeal of the foot launched to elected members of Congress comes at a time when discussions remain very difficult around the two major investment and reform projects of Joe Biden.
The US president said Thursday he was cautiously optimistic about the possibility of an agreement to pass his package of social and infrastructure reforms.
It will undoubtedly, however, have to put aside the increase in taxes for the richest households and businesses, a key element in the financing of its measures.
“I don’t think we can get” these tax hikes, Joe Biden said.
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