Home Latest News US budget deficit hits record $3 trillion

US budget deficit hits record $3 trillion

by Jonathan Adams
economic relief

The extraordinary figures come as the pandemic has slowed tax receipts, while spending related to the economic relief continued to put strain on finances

The United States budget deficit hit a record $3 trillion for the 2020 fiscal year in August, the Treasury Department said on Friday, as the government’s economic rescue and falling tax receipts continued to put huge strain on the nation’s finances.

The extraordinary figures come as the Trump administration and Congress remain deadlocked in negotiations over additional stimulus measures, with Republicans wary of another big fiscal package and Democrats pushing for trillions of dollars in relief.

The budget deficit for the month of August was $200 billion. The coronavirus pandemic has slowed corporate and individual tax receipts, while government spending has surged, widening the gap between what the United States spends and what it earns in taxes and other revenue. Budget outlays topped $6 trillion in the first 11 months of the fiscal year, which ends Sept. 30. The $3.007 trillion shortfall for the year to date was the largest since August 2009.

The Treasury Department noted that deficit has been the result of heavy spending on unemployment insurance benefits, the Paycheck Protection Program and health efforts related to the economic relief legislation that Congress passed in March.

The Congressional Budget Office projected earlier this week a $3.3 trillion deficit for the year. That would represent 16 percent of the U.S. gross domestic product, the highest level since 1945.

Some Republicans have begun warning about the ballooning deficit, but Treasury Secretary Steven Mnuchin has played down the fiscal situation facing the United States, arguing that the scope of the government spending was necessary for combating the pandemic.

I think before we got into Covid, I thought the debt was very manageable, Mr. Mnuchin said on Fox News Sunday this week. Unfortunately, this China virus has cost us trillions of dollars, and as I’ve said before, this is like a war. In a war, you’ve got to spend whatever you need to spend.

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