CHANGE: As U.S. Debt Surges, Europe Brings Its Own Under Control.

The U.S. government Friday said its deficit rose to $1.7 trillion, or 6.3% of gross domestic product, in the year ended Sept. 30, from $1.4 trillion, or 5.4% of GDP, a year earlier. Without an accounting change related to the administration’s aborted student-loan-cancellation program, the deficit would have been closer to $2 trillion, a doubling from the prior year.

In projections released earlier this month, the International Monetary Fund projects U.S. deficits for all governments will reach 7.4% of GDP in 2024 and 2025.

But in Europe it is a different picture. The IMF expects combined deficits of eurozone governments will fall to 3.4% of GDP this year from 3.6% in 2022, and further to 2.7% in 2024.
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Crucially, it doesn’t seem to have a path to narrowing those deficits: the Biden administration has proposed tax rises that Republicans and some Democrats in Congress reject, while Republicans seek spending cuts that the administration won’t countenance.

Under Biden, federal spending as a percentage of GDP is at post-WWII highs (excluding one-time lockdown bailouts/stimulus of 2020-21), while defense spending (including on Ukraine) as a percentage of GDP is at or near post-WWII lows.