U.S. Budget Deficit Jumped 25% In October And November Thanks To Coronavirus Relief Spending
The Treasury Department said Thursday that the federal budget deficit in October and November—the first two months of the 2021 fiscal year—soared to $429 billion, 25.1% more than during the same period last year, as government spending on the coronavirus crisis skyrocketed.
Government spending during October and November ticked up nearly 9% to $886 billion.
Meanwhile, government revenue dropped 2.9% to $457 billion as the pandemic forced millions of layoffs and federal income tax revenue dropped.
The deficit for the full 2020 fiscal year was a record $3.1 trillion (14.9% of gross domestic product), the largest since 1945 and more than three times the deficit in 2019 (in dollar terms).
The Congressional Budget Office has estimated that the deficit in the 2021 fiscal year will reach 8.6% of GDP— and that’s if no additional fiscal stimulus legislation is passed.
Lawmakers in Washington are embroiled in heated negotiations over the next federal coronavirus aid package as they attempt to agree on and pass legislation to deliver more aid to Americans before the holidays. Those discussions have focused over the last few days on a $908 billion framework brought forward by a group of bipartisan lawmakers. That proposal was designed to be palatable to GOP budget hawks (it excludes a second round of direct stimulus checks to keep costs low) and has the support of top Democrats even though it is significantly smaller than the $2.2 trillion proposal Democratic leadership had been pushing for months. Despite assurances of progress from lawmakers early this week, talks appeared to lose momentum on Thursday.
“I happen to be a deficit hawk,” Sen. Mitt Romney (R-Utah), a member of the bipartisan group pushing the $908 billion framework, said last week. “I don’t like borrowing money, I don’t like spending money we don’t have, but the time to borrow money—maybe the only time to borrow money—is when there is a crisis, and this is a crisis.”
What To Watch For
Lawmakers are hoping to bundle the next federal aid bill with an omnibus spending bill, but they’re far from an agreement on either front and a December 11 government shutdown deadline is looming. The House Wednesday passed a short-term continuing resolution to buy Congress another week, but the Senate will need to pass it and President Trump will need to sign it before the end of the day on Friday. It’s not yet clear when the Senate plans to vote on the measure.
US budget deficit up 25.1% in first 2 months of budget year (Associated Press)
As Stimulus Negotiations Drag On, Pelosi Says Congress ‘Cannot Leave’ Without Passing A New Aid Bill (Forbes)
Here’s What’s Holding Up The Stimulus Deal (Forbes)
Thanks To Stimulus Spending, U.S. Debt Expected To Exceed The Size Of The Entire Economy Next Year (Forbes)