FX168 Financial News Agency (Asia-Pacific) - Market analyst Mike Maharrey said that the budget deficit of the Biden administration in August reached a record high this year. According to the latest statement from the US Department of the Treasury, the budget deficit in August was $380.08 billion US dollars. He also mentioned that US bond interest has exceeded $1 trillion for the first time.
With only one month left until the end of the US budget, the fiscal year 2024 deficit is projected to reach $1.9 trillion US dollars. The Biden administration has already covered the $1.7 trillion deficit from 2023 with its own money.
Mike mentioned, 'Despite the fact that the US economy should be 'strong,' we are seeing such high levels of expenditure and massive deficits. Imagine what the deficit would look like when the economy declines.'
According to the report from the US Department of the Treasury, there were $306.54 billion in revenue for August. Compared to August 2023, revenue increased by 8.3%.
The year-on-year growth in tax revenue in July is not abnormal; it is the case for the whole year.
Mike continued, 'To give you an idea of how the Treasury is doing, in April, the US experienced a surplus due to tax day. Tax revenue for April was $776.2 billion, a 22% increase from the previous year. This overturns the Democratic Party's claim that the deficit is due to tax cuts; the real problem lies in spending.'
'To say that the Biden administration spends money like a drunken sailor is an insult to drunken sailors.'
In August, the US federal government spent $686.62 billion.
Mike pointed out that this number is somewhat inflated because some of the September payments were delayed until August, and September 1st happened to be a Sunday. This may mean that the total expenditure for September will be slightly lower.
Federal spending for the fiscal year 2024 is $6.29 trillion, which is already 2.6% higher than last year and there is still one month of spending remaining.
(Source: GoldSeek)
"Do you remember how the Biden administration promised that through the debt limit agreement, (pretending to) cut spending would save hundreds of billions of dollars? As you can see, this has never happened, which should demonstrate the government's commitment to spending. Don't think I'm just targeting Biden and the Democratic Party, they just happen to be the ones currently driving the car towards the cliff. When Trump was at the helm, the situation wasn't much better," Mike emphasized.
He continued to explain that before the outbreak of the epidemic, the US government had only appeared budget deficits exceeding $1 trillion four times, all during the Obama administration after the 2008 financial crisis.
The Trump administration almost reached the $1 trillion mark in 2019, and before the outbreak of the epidemic, the budget deficit for the fiscal year 2020 was expected to reach trillions of dollars, despite the US economy reportedly being in "the best period in history."
Mike said, "The economic disaster caused by the epidemic has given policymakers an excuse to spend money without thinking. The US has seen record deficits in fiscal years 2020 and 2021. This reveals an ugly truth - borrowing and spending are a bipartisan game. Regardless of who is in power, and regardless of what you hear about Washington cutting spending, the federal government will always find new reasons to spend more money. Whether it's a disaster, emergency, or someone else's war, the spending train never reaches the station."
Rising debt and increasing interest rates have dealt a double blow, and the US federal budget is about to collapse.
In August, the US government spent $92.29 billion on interest payments on national debt. This makes this year's total interest expenditure exceed $1 trillion for the first time in history. This year's interest expenditure is nearly 30% higher than last year, accounting for about 23% of total revenue.
In August, the US federal government's interest expenditure exceeded defense spending, reaching $89 billion, the only expenditure category higher than this is social security and medical insurance, and interest expenditure will continue to rise.
Before the Fed starts raising interest rates, most of the debt on the books is financed at very low interest rates. Every month, some ultra-low-yield bonds mature and must be replaced with much higher-yielding bonds.
Mike finally concluded: 'Anyone who says 'deficits don't matter' is deceiving themselves, and the only way to escape the fiscal death spiral is to significantly cut spending and/or significantly increase taxes, I won't hold my breath.'
