Treasury Secretary Blames Democrats for Record Budget Deficit

U.S. Treasury Secretary Scott Bessenet has attributed the projected large budget deficit for this year to the Democrats. During a hearing before the House Ways and Means Committee on Wednesday, Bessenet stated, "What we are seeing now is a surge in spending." He noted that, apart from periods of war, pandemic, or economic recession, "the situation last fiscal year was unprecedented; we have never seen a deficit as high as this proportion of GDP."

Bessenet predicted that the deficit for the current fiscal year would be between 6.5% and 6.7% of GDP, marking the third consecutive year that the deficit has exceeded 6% of GDP. According to the U.S. Treasury Department's data, the deficit for the 2024 fiscal year is 6.4%, and for 2023, it is 6.2%. The fiscal year ends in September.

During the hearing, which reignited debates between the two parties on tax policies, Bessenet remarked, "I find it hard to accept lectures from those who created the largest deficit in history." Democratic Representative Mike Thompson argued that records show that previous tax cuts proposed by Republican presidents have increased the national debt. He stated, "Every expert will tell you that Trump's proposed tax cuts would also increase our debt."

When asked about comments by Republican Representative Thomas Massey, who voted against the Republican tax bill last month, regarding the rise in U.S. bond yields due to concerns that the bill would increase the deficit, Bessenet dismissed the claim. Bessenet, a former hedge fund manager, said, "Mr. Massey does not understand the bond market." He argued that looking at any 24-hour window of market activity "is incorrect." Bessenet pointed out that while the 10-year government bond yields in Germany and Japan are now higher than at the beginning of the year, those in the U.S. are lower.

When Democratic Leader Richard Neal of the committee mentioned that tax revenues are increasing this year due to President Joe Biden's increase in the IRS budget, Bessenet smiled. The Treasury Secretary explained that this was because he found the IRS's technology outdated when he took office. He claimed that the Democrats' efforts have focused on increasing the number of IRS employees rather than improving the agency's technology.

Bessenet was also questioned about whether he could guarantee that IRS audits would not be politically influenced. He responded that he would act in accordance with the law. Bessenet also stated that he had not had any discussions with Donald Trump regarding his tax status at Harvard University.