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Topline
The US budget deficit continues to widen to unprecedented levels, according to data from the Treasury Department on Wednesday, as the government prepares to inject $ 1.9 trillion more into the economy with the stimulus package Massive of President Joe Biden.
President Joe Biden speaks from American Rescue State Dining Hall … [+]
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Highlights
The gap between government spending and revenue grew to more than $ 1 trillion in the first five months of fiscal 2021, the Treasury Department said in a budget report on Wednesday, marking an increase of about 68% compared to the same period last year.
Last year, the budget deficit rose to $ 3.1 trillion – nearly $ 2 trillion more than initially projected and tripling the deficit in 2019 as the pandemic forced lawmakers to consolidate funds relief to avoid an economic collapse.
President Joe Biden is set to sign his $ 1.9 trillion stimulus package on Friday, a move that is sure to jumpstart spending – and borrowing – after $ 5 trillion in stimulus spending. last year helped reduce nearly $ 6 trillion in the country’s federal debt.
In February, the Congressional Budget Office projected that even without additional fiscal stimulus, the federal budget deficit would be $ 2.3 trillion in fiscal 2021, noting that the deficit has widened “considerably” due to the legislation. stimulus.
Key context
The US budget deficit is often viewed as a measure of government efficiency and, of course, public spending. A larger deficit usually means the government takes on more debt, which can ultimately limit its willingness – and ability – to increase spending in order to curb economic downturns or fight pandemics, notes David Wessell. , director of the Hutchins Center on Fiscal. and monetary policy at the Brookings Institute. The US government has operated with a budget deficit since 2002. The last budget surplus, in 2001, was $ 127 billion.
Large number
$ 35 trillion. That’s how well CBO projected in February the nation’s debt will rise by the end of this year – before adjusting to fiscal stimulus. As of Wednesday, the national debt stood at $ 28 trillion.
To monitor
No more stimulus. “Democrats are looking to their infrastructure plan, which reports could be worth as much as $ 4 trillion over 10 years, but it will be much harder to get past Congress as resistance grows against them. bills that reduce the deficit, ”said Adam Crisafulli, founder of Vital Knowledge Media. said Wednesday.
Further reading
US budget deficit soars to $ 736 billion as government throws money into stimulus checks (Forbes)
Federal deficit hit record $ 3.1 trillion – more than triple last year’s deficit, CBO estimates (Forbes)
National debt set to become bigger than the entire U.S. economy, says CBO (Forbes)
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