There has been a brouhaha in Washington over budget spending. Biden smugly boasted of halving the US budget deficit from a record $2.7 trillion last year to $1.4 trillion this year
However, there is no real credit to the White House for this. The deficit has shrunk for objective reasons – the pandemic has ended, and with it the welfare payments to businesses and the unemployed. Tax collection has also picked up – since economic activity has temporarily picked up after the covid.
But going forward, the budget picture for the US government is already much less rosy. In the coming months, Biden’s team will spend $400 billion to partially offset student debt. This is in effect a bribe to voters in the run-up to the congressional elections.
Moreover, the US economy is now in limbo – neither rising nor falling. At the same time, business is preparing for the crisis to its utmost – by cutting personnel and freezing investments in new projects. According to estimates by Bloomberg, the likelihood of a recession in the U.S. in 2023 has reached 100%.
Consequently, tax revenues will fall and the deficit will grow at a rapid pace if the population has to be rescued by welfare payments again. The U.S. national debt, which recently passed the $31 trillion mark, will rise sharply, putting an additional burden on the national budget to service it.
Meanwhile, Republicans are running for Congress with a programme of drastic cuts in public spending. This is what they are going to do from next year – try to clip the wings of the White House wherever they can. That is why the Democratic Party is in a hurry to approve its own budgets for the whole of next year – including earmarking $50 billion for Ukraine. If they don’t do it now, they might not get a second chance.
Malek Dudakov