US Budget

Main article: US economy

US National Debt

Main article: US State Debt

The United States exists solely due to a constant increase in public debt.

The US fiscal year begins in October.

Military budget

Main article: US military budget

2024

The budget deficit reached the level of the crisis of 2009-2010, taking into account inflation

The US budget deficit in May 2024 amounted to $347 billion - the second worst result in history after May 2020 ($398 billion), when the printing press was actively working.

For fiscal 2024 (Oct.23-May 24), the deficit grew to 1.2 trillion vs 1.16 trillion a year earlier. During the period of fiscal rabies 2020-2021 for the specified period, the gap was 1.8-2 trillion.

At the end of 12 months, the deficit amounted to 1.73 trillion in accounting execution and about 2.05 trillion in cash execution, because in September 23 there was a write-off of an advance on unrealized student loans by more than 300 billion.

Taking into account inflation in 2021 prices, the adjusted deficit amounted to 1.8 trillion per year - this is the peak level of the 2009-2010 crisis, taking into account inflation.

In May, revenues increased by 5.2% YoY, and expenses + 22.4%, but in terms of expenses, the shift was due to the day off on June 1 (part of June expenses fell on the last day of May). For the financial year, revenues increased by 9.8% YoY, and expenses increased by 8% or + 331 billion in expenses.

Due to what categories did the increase in expenses occur?

• Interest expense posted the most significant gain of 177 billion, rising to 601 billion in 8 months.
• Old-age social security excluding benefits, subsidies and subsidies - 113 billion
• Medicine in total - 108 billion
• Defense - 45 billion.

Four of these categories contributed + 444 billion in spending growth for the year, respectively, the remaining items of spending decreased by $113 billion due to social benefits, subsidies and subsidies to the population - minus 84 billion and minus 30 billion education.

The growing categories of spending are "protected" and not subject to reduction, so there is no potential for optimization, except for tax increases.

The US budget is not stimulating, because during the crisis, the main incentive channel has always been in the form of benefits, subsidies and income support for the population, as well as commercial loans and subsidies to business.

Even in this structure, the deficit comes out about 2 trillion a year, which makes the budget extremely vulnerable to any hint of a crisis, Spydell Finance wrote.

The budget deficit reached $1.07 trillion in the 1st half of the fiscal year. Interest on debt rose 36% to $522 billion

Adjusted for calendar differences, the U.S. budget deficit was 4% larger than the same period the previous year.

The interest burden on outstanding U.S. debt remained the biggest reason for the widening deficit. Interest expense in the first half of dollars the financial year was 522 billion, up 36% from 2023.

12-month deficit $1.8 trillion

Famous American investor Charlie Bilello in March 2024:

The US government continues to spend money like a drunken sailor, having a budget deficit of $1.8 trillion. It comes as the economy is still growing and house/share prices are at an all-time high. What happens to deficits when a recession hits?

2023

Citadel founder: US 'spending at state level like drunk sailor' and it could lead to disaster

Citadel founder Ken Griffin said in November 2023 that the US government did not expect to raise rates "when we went for a sharp increase in spending, which led to a deficit of $33 trillion."

Griffin added that it is necessary to restore order in US budget spending, since the country "spends at the state level like a drunken sailor." He warned that the current budget deficit is unsustainable.

"The Fed may continue to print money to avoid default, but" the economic consequences will be catastrophic. "

Budget deficit $1.7 trillion or 6.3% of GDP for the fiscal year

When assessing the American economy, it should be borne in mind that the current trends of prolonged stagnation with a roll into recession occur in conditions of about a record budget deficit.

What would happen to the American economy if the deficit was not promoted to record levels?

According to official data, the US budget deficit in fiscal year 2023 amounted to 6.3% of GDP and grew by $320 billion - to $1.7 trillion against 1.4 trillion a year earlier.

Budget revenues decreased by 9.3% YoY at face value, amounting to $4.4 trillion, and compared to 2019, an increase of 28.2% with accumulated inflation of 19%, i.e. in real terms, an increase of almost 8% over 4 years.

Income decreased solely due to taxes on personal income, which at face value decreased by 20% as part of the implementation of various tax benefits, deductions and preferences, including due to low taxes on capital gains (2022 was devastating).

Budget expenditures decreased by 2.2% YoY, amounting to $6.13 trillion, and compared to 2019, an increase of 38%, but it should be borne in mind that $330 billion of advanced student loan expenses were deducted in August, therefore, actual expenses amounted to over $6.45 trillion, while in 2022, on the contrary, expenses were not $6.27 trillion, and $5.94 trillion due to student write-offs advanced and reserved in September 2022.

Accordingly, adjusted spending grew by almost 9% YoY at face value, and the real deficit was not $1.7 trillion, but $2 trillion vs $1.1 trillion in 2022.

Taking into account inflation, the budget deficit exceeded the scale of incentives in the 2009-2011 crisis by about 10%, but half the fiscal madness in the COVID-19 crisis .

In real terms, the budget deficit is three times higher than 2014-2016 and twice as high as 2018-2019, which is associated with a significant deviation in spending in real terms (by about 20%) from the 2014-2019 trend, while revenues are greatly underdeveloped.

The expenditures of the American budget are almost 19-20 times (!) Higher than the expenditures of the Russian budget (forecast 31-32 trillion rubles of expenses for 2023).

For the fiscal year, the most significant contribution to the increase in expenses (+ 472 billion in all items) was made: net interest expenses - plus 153 billion compared to last year, increasing to 561 billion from October to July.

Education and programs to support the qualifications of workers increased spending by almost 100 billion, defense spending plus 43 billion, subsidized loans plus another 65 billion.

Medicine in the aggregate "only" plus 47 billion or plus 3.6% y/y, although the second largest category of expenses after social spending increased by only 39 billion or plus 2.2% y/y.

Thus, the main driver of spending growth is: interest payments, education, defense and subsidized loans, Spydell Finance wrote.

Nominal spending on national defense reached a historic high of $821 billion, and compared to 2019, growth by 19% and almost zero in real terms (accumulated inflation on the GDP deflator amounted to 18% in 4 years).

Defense spending in 2023, taking into account inflation, is 15% lower than in 2010! The defense article is the most "crushed" in comparison with all other items of spending, where the distribution of spending growth is in the range of 37-39%, and in defense only 19% in 4 years.

Thus, as of 2023, there is no emphasis on military-industrial complex and defense in the United States, and the entire increase in comparison with 2021 is almost entirely associated with the support of Ukraine. The budget is not yet defense and large-scale investments in the military-industrial complex are not traced.

Increase in budget deficit by 170% in 9 months to $1.39 trillion due to increased payments on public debt

In the first nine months of the fiscal year, the cost of servicing the US public debt increased by 25%, reaching $652 billion and contributing to a significant increase in the budget deficit. Rising interest rates mean more debt servicing costs.

According to the US Treasury, in the nine months ended June 2023, the federal budget deficit amounted to $1.39 trillion. and increased by about 170% compared to the same period last year.

Forecast to increase budget deficit to 10% by 2053

According to forecasts voiced in a report by the US Congress in June 2023, the US budget deficit over the next 30 years will significantly exceed the 1993-2022 average of 3.7% of GDP, reaching 6.4% of GDP in 2033 and 10% of GDP in 2053. Until 2053, the level of budget deficit will be in the region of 7.3% of GDP - more than twice as much as the average over the past half century. In 2023, the budget deficit is expected to be 5.8% of GDP. Debt in the form of securities held by the population will reach 98% of GDP in 2023, and in 2029 will amount to a record 107% of GDP.

Deficit growth by 2.7 times in 8 months

The US budget deficit in the eight months of the fiscal year grew 2.7 times.

The US state budget deficit in May amounted to $240.348 billion, which is 3.6 times higher than in the same month last year ($66.223 billion), the Ministry of Finance said.

Budget revenues fell by 21% to $307.487 billion. Expenses increased by 20.3% and amounted to $547.835 billion. Costs have mostly increased under Medicare's health insurance program and in the social insurance system.

Income slump, spending growth and budget deficit to $1.94 trillion in 12 months

In the United States, budget problems are worsening - a drop in income with growing spending. Over the past 12 months to April 2023, revenues amounted to $4.6 trillion (minus 6% y/y), and expenses - 6.54 trillion (+ 7.4% y/y), forming a deficit of $1.94 trillion (a year earlier - 1.2 trillion).

Since the beginning of the 2023 fiscal year (October 2022 - April 2023), revenues have decreased by 10%, and spending has grown by 7.9%, which led to a sharp increase in the deficit to 924 billion vs 360 billion over the same period a year earlier.

April turned out to be weak in fees. This year they collected 638 billion for the month, which is 26% lower than last year, but expenses had to be reduced to 462 billion (minus 17% YoY). The budget surplus decreased from 308 to 176 billion.

Taking into account inflation, the budget deficit is comparable to the worst period of the 2009 crisis, that is, the United States has returned to an aggressive incentive policy comparable in scale to crisis periods. They did not spend long in budget consolidation, Spydell Finance wrote. The falling private demand has to be replaced by the state again.

Among the major changes in spending are extreme growth in net interest expense, which increased from 255.3 billion to 363.7 billion in the fiscal year. Spending on medicine in the aggregate decreased from 978.2 to 940.2 billion due to the curtailment of antiquated measures.

Defense spending increased from 438 to 465 billion, where the entire increase is fully supported by Ukraine. Loan programs increased from 10 billion to 41 billion, where everything went to compensate for the hole in the FDIC after the rescue of three banks.

Targeted subsidies and programs to help the population decreased by almost 100 billion or 20%, but social security increased by 10% or 74 billion - indexation of old-age pensions.

For May 2023, there are three vulnerable categories in the United States that devour the budget:

• Defense spending, which will continue to grow as the military-industrial complex is promoted and involved in international conflicts;

• Interest expense, which will continue to grow exponentially amid extremely high rates;

• Social and medical costs - due to demographics.

Deficit growth by 63% in the 1st half of the financial year to $1.1 trillion

The budget deficit of the US federal government reached $1.1 trillion in the first half of the fiscal year, which is 63% more than a year ago, due to increased spending on education, medical benefits and interest payments on debts.

The deficit in March 2023 amounted to $378 billion, according to monthly budget data released on Wednesday by the Ministry of Finance.

Interest expense - 17% of the US budget - maximum since 2000 g

By April 2023, interest expenses to US budget revenues are approaching 17% - the most since 2000.

2022

US budget deficit continues to rise

From October to December 2022 (the new financial year), the deficit was 421.4 billion, compared with 377.7 billion in 2021, 572 billion in 2020 and 356.6 billion in 2019.

Annual revenues interrupted the upward trend from January 2021 to July 2022 and stabilize at 4.4-4.5 trillion per year, while annual expenditures (after an emergency reduction from 7.8 trillion in March 2021 to 5.3 trillion in July 2022) found a new equilibrium of about 5.7 trillion with moderately upward dynamics in 2021 prices.

The annual budget deficit at the moment reached 4.2 trillion in March 2021, sharply decreased to 880 billion in July 2022 and now the deficit will normalize to 1.3 trillion with growth potential to 1.5-1.7 trillion by September 2023.

The decrease in expenses was due to three key actions:

• The rejection of helicopter money, the costs of which reached 1.6 trillion in 2021 and returned to 865 billion in the previous financial year.

• Refusal of emergency credit programs to stabilize backbone companies and the most affected sectors of the economy after covid lockdowns - 572 billion and 304 billion were allocated for these purposes in 2020-2021, in 2022 they covered this item of expenses.

• They also stopped subsidizing transport (mainly the aviation industry, which gobbled up over $50 billion in state support) - this is another 40-50 billion in savings per year.

And what is growing out of spending? The most capacious items of expenditure:

• Health care costs, excluding health insurance, absorb 300-400 billion excess costs in accordance with the 2012-2019 norm, reaching 900-1000 billion in 2023.

• Medical insurance is growing in accordance with plus or minus inflation, but the category is capacious and takes almost 800 billion expenses annually.

• Social security (mainly pensions) is 1.2 trillion, and inflation and demography will absorb at least 1.3 trillion in 2023.

• Interest expenses went into overdrive. Before fiscal and monetary rabies, they paid 350-370 billion a year, 2022 billion 475 year, in 2023 an increase of up to 760 billion is possible, which will exceed the defense budget!

• Do not forget the factor of Ukraine and the costs of the defense industry at 800 billion per year.

The budget deficit will grow, the Spydell Finance channel noted.

State support in comparison with the income of the population remains high

The term "helicopter money" means excessive net social support of the state - all types of targeted programs of state assistance in favor of the population minus social contributions from the population in favor of the state.

Targeted assistance programs are retirement benefits, Medicare and Medicaid programs, unemployment insurance payments, veteran support and any subsidies, monetizable benefits and benefits that the federal and municipal governments pay directly, including covid checks.

It does not take into account the development of social infrastructure and any other spending of the state on economic, social and cultural development.

So, net social support during the period of covid madness was at the moment up to 55% of the salaries and bonuses of American workers. From 2013 to 2019, the norm was 15%, before the 2009 crisis, 9-10% was considered the norm from 2002 to 2008.

From April 2020 to September 2021 (the period of scattering "helicopter money"), this figure reached 28% compared to 16.2% in the period from September 2008 to December 2011 (peak 17.9%) in response to the financial and economic crisis.

Accordingly, the scale of support measures in response to the 2020 crisis was 1.7-1.8 times more powerful in relative terms than the response to the 2009 crisis, and at its peak more than THREE times more powerful.

Hence the "helicopter money" and all the accumulated imbalances: skewed savings, excessive money supply, degradation of the labor market, imbalances in supply and demand, inflated public debt.

In the second half of 2022, the above coefficient returned to 16%, which is above 15%, considered the norm in 2013-2019, but it is hardly possible to remove all support. Too many dependents, degrades, but also the demographic structure and natural aging need to be considered.

Net social support in national income has a similar profile. For 2022, 10% compared to the norm of 9.2%. Gosstimuls have been reduced, but by historical standards they are very high.

2021

Deficit for the year $2.77 trillion

In 2021, the United States recorded the second largest annual budget deficit in history.

dollars The deficit for the fiscal year through September was 2.77 trillion, down from a peak of $3.1 trillion the previous year, a Treasury Department report showed.

Deficit in July $302 billion

The US government reported a budget deficit in July 2021. - $302 billion, against the deficit in July 2020 - $63 billion^[1]

• Budget expenditures in July $564 billion against $626 billion in 2020.
• Revenues of $262 billion against $563 billion in 2020.
• The US deficit for the first 10 months of fiscal 2021 amounted to $2.540 trillion, which is 10% lower than last year's record level of $2.807 trillion.

2020

3.13 trillion deficit: the record for the entire history of the country

The US fiscal 2020 budget deficit was a record high and stands at 3.132 trillion through October 16 dollars , compared to a similar deficit of $984 billion in 2019.

The deficit is three trillion, the largest in the history of the country.

Record deficit in June $864 billion

The US budget deficit reached a record $864.1 billion in June amid a sharp increase in spending and a drop in income.

US federal government spending increased more than three times over the year amid the fight against the economic consequences of the coronavirus and reached $1.1 trillion in June (see graph below). About half of this money ($511.4 billion) went to help small businesses.

The volume of the federal program of additional assistance to the unemployed in June amounted to $80.4 billion, and the states paid $35.2 billion in unemployment benefits.

The US budget deficit in the first nine months of the current fiscal year reached $2.7 trillion, which is almost three times higher than the same figure for the entire fiscal year 2019. The expenses of the US federal government in the first nine months of the current financial year amounted to a record $5 trillion.

US federal budget revenues in June decreased by 27.9% YoY to $240.8 billion.

The US budget deficit for 8 months of the financial year grew 2.5 times, in May - 1.9 times

The state budget deficit USA in May 2020 amounted to $398.821 billion, which is 92% more than in the same month last year ($207.768 billion), the country's finance ministry said.

Forecast of budget deficit growth to $4 trillion

According to the forecast for the beginning of May 2020, the US budget deficit will amount to almost $4 trillion in 2020 - the highest since World War II.

Budget deficit components:

$1 trillion - January deficit

Crisis deficit:

$454 billion - guarantees for bank and commercial loans

$377 billion - Small Business Wage Preservation Grants

$290 billion - direct payments to families

$220 billion - expansion of unemployment insurance

$229 billion - reimbursement of lost tax revenues

$211 billion - deferred payroll tax payment

$150 billion - state and local stimulus funds

$147 billion - for additional expenses, maintenance of wages in aviation, other expenses

$134 billion - emergency care for families

$570 billion - corporate and labor tax cuts

2019: $1.02 trillion deficit

At the end of the 2019 calendar year, the US budget deficit amounted to $1.02 trillion, the Treasury Department announced at the beginning of 2020. The previous time, CNN notes, the United States ended the calendar year with a budget deficit of more than a trillion dollars in 2012.

The gap between revenue and budget spending, CNN reported, continues to grow. So in October-December 2019, it amounted to $357 billion, 12% more than in the same period a year earlier.

The main factors influencing the growth of the US budget deficit recently are tax cuts and a budget deal that allows US President Donald Trump to increase spending by the federal government for two years.

The US budget deficit grew by 39% in the first eight months of fiscal 2019 and reached $738.6 billion, which is $206 billion more than a year earlier. The budget deficit at this time is 4.7% of GDP.

One reason is the Trump administration's corporate tax cuts. By raising tariffs on Chinese and goods of their other countries, US President Donald Trump is trying to compensate for the lost income, but so far he is doing poorly.

2018: Federal Budget Revenue Structure

2015: Deficit of $438 billion or 2.5% of GDP

At the end of 2015, which ended on September 30, 2015, the negative balance amounted to $438.9 billion, or 2.5% of GDP. This is the minimum deficit since 2007, both in dollar terms and in relation to GDP.

The last time the annual budget surplus was recorded in the United States in 2001.

The average size of the US budget deficit since 1980 is about 3.2% of GDP^[2]

2012: $1.1tn deficit

The US fiscal 2012 budget deficit was $1.1 trillion, more than a trillion dollars for the fourth consecutive year. This was reported on October 13, 2012 by the Associated Press.

Compared to the previous fiscal year, the deficit narrowed by $207 billion. Tax revenue rose 6.4 percent, reaching $2.4 trillion. At the same time, government spending fell 1.7 percent to $3.5 trillion.

As the agency notes, the presidency of Barack Obama coincided with the last four years, when the budget deficit exceeded a trillion. At the same time, his election program in 2012 contains a promise to significantly reduce the deficit within ten years. One way to do this will be to abolish tax benefits for wealthy Americans, the president said.

Earlier it was reported that the global financial crisis of 2008 and the recession cost the United States a total of at least $12.8 trillion^[3].

2009: Deficit of $1.6 trillion or 12% of GDP

The US budget spent 2009 with a deficit of $1.6 trillion, or 12 percent of GDP. Money was needed for many economic stimulus programs, while treasury revenues plummeted. After gasping for numbers, Congress passed the budget after all, but the Republican majority, recently requiring fiscal moderation, said it was the last time.

According to other sources, in 2009 the maximum deficit in the history of the country was reached - $1.41 trillion (9.8% of GDP)^[2]

2008: $460 billion deficit

For a long time, the procedure for raising the debt ceiling was more of a ceremony. None of the leading politicians would have thought of making an epic confrontation out of this. This is largely due to the fact that the US debt itself was small for a long time, rarely accounting for more than two-thirds of GDP, and the economy grew at a faster pace. Accordingly, no one has seen an underlying threat from the build-up of obligations.

Everything changed by the end of the 2000s. In 2008, when the presidency of George W. Bush was ending, it turned out that they ended the USA year with a budget deficit of 460 billion. dollars Then this figure amazed the imagination and aroused alarming sentiments that "you cannot live on loan." But then the global financial crisis broke out - and it became clear that this amount was just nonsense.

See also

• Budget of Russia

Notes