Washington — US treasury secretary Scott Bessent on Wednesday urged Democrats to “be heroes” and side with Republicans to end the federal government shutdown, which he said is costing the US economy about $15bn a day in lost output.
The wave of investment into the US economy, including into artificial intelligence, is sustainable and is only getting started, but the federal government shutdown is increasingly an impediment, Bessent said, adding it was starting to “cut into muscle” of the economy.
“The only thing slowing us down here is this government shutdown,” Bessent said at a CNBC event held on the sidelines of the IMF and World Bank annual meetings in Washington. “There is pent-up demand, but then President [Donald] Trump has unleashed this boom with his policies.”
Incentives in the Republican tax law and Trump’s tariffs would keep the investment boom going and fuel continued growth, Bessent added.
“I think we can be in a period like the late 1800s when railroads came in, like the 1990s when we got the internet and office tech boom.”
Shrinking deficit
Bessent also said the US deficit for the 2025 fiscal year ended September 30 was smaller than the $1.833-trillion shortfall posted in the prior fiscal year. He did not provide a figure, but said that the deficit-to-GDP ratio could come down to the 3% range in the years ahead.
The treasury department has not yet reported the annual deficit figure. The Congressional Budget Office estimated last week that the US fiscal 2025 deficit eased to $1.817-trillion despite a $118bn jump in customs revenue from Trump’s tariffs.
“The deficit-to-GDP, which is the important number, now has a five in front of it,” Bessent said at the CNBC event.
Asked if he wanted to see a three at the start of the deficit-to-GDP ratio, Bessent said, “Yes, it’s still possible”, adding the ratio would come down if the US could “grow more, spend less, and constrain spending”.
Meanwhile, the White House said Trump signed an order on Wednesday directing Pentagon chief Pete Hegseth to ensure active-duty US military personnel receive pay on October 15 during the federal government shutdown.
Reuters
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