Record deficit in the United States: a time bomb as the elections approach!

As the United States approaches a crucial presidential election, the budget deficit for fiscal year 2024 has reached record highs, raising concerns about the sustainability of the world's leading power's public finances. Indeed, with debt continuing to grow despite increasing tax revenues, discussions around budgetary management find themselves at the heart of the political debate.

The historic deficit and explosion of debt costs

The United States budget deficit for fiscal 2024 reached $1.833 trillion, or 6.4% of gross domestic product (GDP), up significantly from $1.7 trillion recorded in 2023. According to the Department of US Treasury, this increase is mainly due to the significant increase in debt service, which increased by almost a third. “The sharp increase in interest rates during the year has significantly increased the financial burden of the national debt,” he said. specified the Treasury Department. However, tax revenues increased by 11% this year, driven by an economic recovery and significant wage gains, but they were not enough to offset the impact of high rates.

The overall context of this situation is also based on the massive public spending undertaken to support the economy after the Covid-19 crisis. Indeed, the United States, after reducing its deficit in 2022, saw its financial situation deteriorate again in 2023 and 2024, with expenditure reaching $6,752 billion. The Biden administration is trying to reassure and emphasizes its investments in infrastructure and renewable energy. In addition, it emphasizes the need to maintain long-term growth. But the size of the deficit remains a major concern as the elections approach.

The political and electoral issues around the deficit

With less than two weeks before the presidential election, the budget deficit has become a key issue in political campaigns. The candidates, Kamala Harris for the Democrats and Donald Trump for the Republicans, blame each other for the current situation. A Biden administration official pointed to tax cuts implemented by Republicans. He accuses them of having widened the deficit through the reduction of state revenues. For his part, Donald Trump openly criticizes the current administration's excessive public spending, and promises to restore the economic greatness of the United States by reviving key industries such as the automobile industry.

These political exchanges hint at the long-term implications for the American economy. While the Fed has begun lowering interest rates to relieve financial pressure, the impact of these decisions likely won't be seen for several months. However, deficit management remains a delicate subject, for the national economy, but also for the international relations of the United States, particularly in terms of aid to Ukraine or trade relations. In this tense context, voters will soon have to decide between radically opposing budgetary approaches, with potentially serious consequences for the country's economic future.

The continued rise in the American deficit places the country at a crossroads. While the presidential election promises to be decisive, the next administration will face major challenges in restoring public finances and continuing economic recovery efforts. The coming months promise to be decisive, both for the fiscal future of the United States and for its position on the international scene. We hope that the recovery of public finances will not involve extreme regulation of cryptos in general, and of Bitcoin in particular.