- The US federal budget deficit soared to a record $US3.1 trillion in the fiscal year that ended in September, according to Treasury Department data published Friday.
- The monthly budget report reflects the historic fiscal spending used to pad the US against the coronavirus pandemic, as well as the weakened tax income from Americans struggling through the pandemic.
- Outlays climbed to $US6.6 trillion, led mainly by the $US2.2 trillion CARES Act passed in March.
- The deficit surpasses the White House’s February forecast by more than $US2 trillion. It’s also roughly three times the deficit seen in fiscal 2019.
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The US federal budget deficit spiked to a record $US3.1 trillion in the fiscal year that ended in September, according to data released Friday by the Treasury Department.
The monthly budget statement caps a year rife with economic catastrophe and unprecedented relief measures. The coronavirus pandemic first slammed businesses, corporations, and households in February and continues to wreak havoc on US economic growth as case counts swing higher.
The fallout prompted Congress to allocate several trillion dollars for fiscal support, including the $US2.2 trillion CARES Act passed in March. In all, government outlays leaped to $US6.6 trillion in 2020 from the $US4.4 trillion total seen last year.
Receipts reached $US3.4 trillion, reflecting a drop in tax income from the year-ago period as Americans struggled through the once-in-a-century pandemic.
“As the country continues to open up and this Administration pursues its pro-growth agenda, our economy will continue its robust recovery, sending Americans back to work and improving our fiscal picture,” Russ Vought, the director of the White House Office of Management and Budget, said in a statement.
Treasury Secretary Steven Mnuchin added that the CARES Act and other stimulus measures paved the way for “a strong economic recovery.”
The yearly total surpasses the White House’s February forecast by more than $US2 trillion. It’s also roughly three times the deficit seen in fiscal 2019.
To be sure, the ballooning US debt pile will be relatively easy for the government to pay off in the coming years. The Federal Reserve has indicated it will hold interest rates near zero through at least 2023, ensuring low borrowing costs for the government.
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Still, the sum stands to climb as legislators deliberate over a new stimulus package. Democrats and the White House inch closer to compromising on a bill set to cost between $US1.8 trillion and $US2.2 trillion. Senate Republicans, on the other hand, object to the hefty price tag and hope to pass a $US500 billion measure. Senate Majority Leader Mitch McConnell indicated Thursday he wouldn’t even bring a larger deal to a vote.
Lawmakers have plodded forward in stimulus talks for weeks with little to show for progress. At the same time, economists on Wall Street and elsewhere in the federal government emphasised the importance of new aid as the pace of recovery slows. Fed Chairman Jerome Powell repeatedly praised the CARES Act for its role in sparking a recovery and urged Congress to approve more stimulus.
Corporate leaders joined the calls over the past week, with several CEOs and other executives calling for new stimulus.
“The consumer has been extraordinarily strong through this crisis, and it’s not luck, and it’s not because they weren’t affected. It’s because of the CARES Act, specifically the unemployment assistance,” Wells Fargo CEO Charles Scharf said.
The bank is seeing signs of Americans’ cash balances “starting to go away” after stimulus programs expired, he added.