The Rise and Fall (and Rise Again) of the US Budget Deficit: Soaring After the Pandemic

The United States (US) is facing a financial crisis. Its debt has exceeded the ceiling, reaching US$3.46 trillion in 2023, equivalent to Rp460 quadrillion (Rp460,000 trillion).

The White House stated that in a meeting next week with four congressional leaders, President Joe Biden will not negotiate on the debt ceiling to avoid the risk of US bankruptcy. Biden will discuss his administration's budget and spending.

“He will not negotiate on the debt ceiling, but the president is willing to have separate conversations about their spending, what they want to do with the budget,” said White House press secretary Karine Jean-Pierre, as quoted by *Katadata* from *Reuters* on Wednesday (3/5).

(Also read: The Journey of US Debt, Reaching Record Highs and Facing Default in 2023)

It seems this superpower will be tightening its spending over the next 10 years. So, what has been the trend of its deficit?

It is known that the budget deficit can be used as a measure of national fiscal balance. A deficit is calculated from the difference between budget revenue and budget expenditure. A deficit occurs when the government spends more money than it receives.

Data from the official US government website, Fiscal Data Treasury Gov, shows that the US has been grappling with a deficit for the past 20 years.

In 2001, the US actually had a surplus of US$0.13 trillion (Rp1.9 trillion, at an exchange rate of Rp14,689 per US dollar). This was the last surplus the US experienced until now.

After that year, the US deficit fluctuated. During the severe economic recession of 2008, the US deficit increased from US$0.45 trillion (Rp6,610 trillion) to US$1.42 trillion (Rp20,858 trillion) in 2009.

The deficit was brought under control again by 2013, below US$1 trillion. However, when the Covid-19 pandemic broke out in 2020, the US deficit almost tripled.

In 2020, the deficit was recorded at US$3.13 trillion (Rp45,976 trillion). This was the largest in the last 20 years.

The US government states that social security, healthcare, and defense spending exceeding revenue can increase the deficit. Moreover, this is mandated by law.

"Although revenue increased during the Covid-19 pandemic, from around US$3.5 trillion in 2019 to $4 trillion in 2021, increased government spending related to widespread unemployment and healthcare caused a surge in the deficit," according to the report.

To pay for the deficit, the federal government borrows money by selling bonds, bills, and other securities. When the federal government experiences recurring deficits, the national debt typically grows.

(Also read: US Budget Spending Largest for the Defense Sector)