Joe Biden's mandate began with a spending binge. It ends with a budgetary fire. The deficit for the first three months of the 2024-2025 financial year – in short the fourth quarter of 2024 – reached a record of 711 billion dollars (690 billion euros), or 200 billion dollars more than at same period in 2024. Revenues reached only $1,083 billion, and they would need to be increased by two-thirds for them to reach expenditures ($1,794 billion), according to figures published Tuesday, January 14, by the Treasury Department.
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In detail, revenues are stagnating, in particular due to the reduction in corporate taxes (110 billion dollars instead of 150 billion), while expenditure is soaring by more than 10%, or around 176 billion dollars. Among the increasing items, health (75 billion), pay-as-you-go retirement (29 billion), the army and veterans (50 billion) and debt interest (20 billion additional dollars).
-This drift leads to a record estimate of the next annual budget deficit, which would reach 1,877 billion, above the 1,833 billion dollars for 2023-2024. This was the highest historical deficit (if we except 2020-2021, the two years marked by the Covid-19 epidemic), i.e. 6.2% of gross domestic product. This figure in a period of growth, full employment and non-deployment of American troops abroad is a major signal that the United States is in an untenable budgetary situation.
Derivative
The four main items (defense, retirement, health, interests) represented more than 80% of federal spending last quarter. Their budgets are very difficult to reduce: health and retirement are taboo subjects that Donald Trump has promised not to touch. There could be room for maneuver in an area that Elon Musk has promised to tackle: defense. But this option is hardly compatible with Donald Trump's desire to modernize his arsenal and his military system and that of his designated defense minister, Pete Hegseth, to rediscover a “warrior” culture.
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