The US budget deficit soared in 2024 as additional tax revenue was not enough to cover the sharp rise in debt service during a period of high rates. An announcement which comes less than three weeks before the American presidential election.
At the end of the 2024 fiscal year, ending September 30, the deficit rose to 6.4% of gross domestic product (GDP), compared to 6.2% in 2023, the US Department of the Treasury announced on Friday. . In round figures, the American deficit therefore amounts to 1,833 billion dollars, up 8% compared to the previous year.
« The Biden-Harris administration remains focused on the long-term growth of our economy, with historic investments in infrastructure, manufacturing and clean energy, while considering our long-term financial outlook », tried to reassure Treasury Secretary Janet Yellen, quoted in a press release published on the occasion of the publication of these figures.
Rising revenues and expenses
In detail, from October 2023 to September 2024, revenues increased by 11%, to $4.919 billion. Taxes paid by American households were indeed higher than in the previous year, as their financial situation improved due to rising employment and wages, a Treasury official said. to journalists.
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Expenditures increased by 10%, to 6.752 billion. This is notably due to the increase of almost a third in debt service, while interest rates were at their highest level since the early 2000s. The American central bank (Fed), however, began lowering rates in September, and is expected to continue its momentum over the coming months, encouraged by slowing inflation.
Third highest deficit in US history
In June, the Congressional Budget Office (CBO) forecast a deficit of $1.9 trillion for 2024. This independent body, responsible for providing the US Congress with budgetary and economic analyses, also predicted that it would then climb. more than expected over the next ten years, driven by the costs of debt interest, and aid to Ukraine. But he also estimated that immigration should inflate GDP by 8.9 trillion dollars over the period.
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Note: the American deficit for the year 2024 reached the third highest amount in the history of the United States, after the records of 2020 and 2021 linked to the Covid crisis. The accounts of the world’s largest economy were then weighed down by the explosion in public spending. In 2022, however, the deficit had been largely reduced. But it started to rise again in 2023, then in 2024, under the effect of the high interest to be paid in the face of the enormous American debt.
Presidential campaign issue
The budgetary situation of the United States is an important subject of the election on November 5, and the two camps accuse each other of having a policy which would further increase the debt. In less than three weeks, voters will have to choose between Democratic candidate and Joe Biden’s vice president, Kamala Harris, and former Republican president, Donald Trump.
A Biden administration official lamented that congressional Republicans were “ responsible for tax cuts that led to lower income levels, increasing debt ”, and that they “ continue to call for massive tax cuts ».
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In parallel with the communication from the American Treasury, Donald Trump and Kamala Harris moved their duel to Michigan on Friday, one of the most contested states in the presidential campaign. “ We’re going to make Detroit great again “, launched the Republican at a meeting in the first city of the State, at the end of a day where the candidate spoke a lot about the automobile industry which he intends to protect and revive by imposing taxes on cars built in the foreigner. For her part, Kamala Harris notably stopped in Lansing, the state capital. She advocated a strong role for the unions and denounced the “ empty promises » of are rival.
France is floundering in its deficit
For comparison, the American public deficit is, as a percentage of GDP, close to that of France, which amounted to 6.1% in 2024, well above the European ceiling of 3%. This earned France an EU procedure for excessive deficit, with six other countries having exceeded the 3% bar set by the Stability Pact last year. They must take corrective measures, under penalty of financial sanctions. The French government has set itself the objective of reducing it to 5% in 2025, which represents an effort of several tens of billions of euros.
(With AFP)
