US Deficit Balloons to More Than $3.1 Trillion

  • US Deficit Balloons to More Than $3.1 Trillion

US Deficit Balloons to More Than $3.1 Trillion

The final fiscal deficit figures for 2020 come at a time when President Donald Trump's administration and Congress have been unable to agree on a new round of coronavirus-related support. Federal spending from October through March was up 6.8%, while revenues rose 6.4%, Treasury officials said. This year, in reaction to the pandemic, the Fed dropped its interest rate target to almost zero and announced a new policy more tolerant of inflation that will likely keep rates lower than they would have been otherwise. The largest source of tax revenue is individual income taxes, which collected $1.6 trillion in 2020. Net interest costs on the public declined 9% last year from a year earlier, the Treasury said, suggesting the government has the capacity to borrow more to finance the recovery.

While the White House and Democrats want to bankroll another $1 trillion-plus aid package, Senate Republicans are preparing a $500 billion bill to vote on later this month.

The yearly total surpasses the White House's February forecast by more than $2 trillion. Indeed, the USA government appears to be far from the limits of its borrowing capacity and the Federal Reserve does not think inflation will rise to its two-percent target for years to come. The federal government's fiscal year begins October 1. "Now that policymakers are enacting necessary, emergency measures to combat the crisis, federal budget deficits are escalating to levels not seen since World War II". Spending like this could further add to the government's budget deficit, but a range of economic experts from across the political spectrum, including Federal Reserve Chairman Jerome Powell, have said the assistance is necessary to prevent the economic recovery from flagging and keep millions from falling into poverty.

The US federal budget deficit spiked to a record $3.1 trillion in the fiscal year that ended in September, according to data released Friday by the Treasury Department. At the same time, economists on Wall Street and elsewhere in the federal government emphasized the importance of new aid as the pace of recovery slows.

September expenditures increased by 206 billion dollars from the previous year, to 498 billion dollars, due to the spending associated with the spread of the new Corona virus.

In September, the year's final month, the USA budget deficit was $125 billion, compared with an $83 billion surplus in September 2019, the Treasury said. Spending by the Small Business Administration, which administered the Payroll Protection Program for small businesses, totaled $577 billion, compared with $456 million a year earlier.

The U.S. government considers money taken from workers and businesses through the tax system to be "revenue", although unlike private sector revenue it is received not through voluntary sales transactions but mandatory collections.

The Treasury Department said the surge was partly due to a drop in corporate and personal tax revenue, which fell by 1%. He is senior vice president.