US budget deficit hits record $3 trillion: CBO
The federal budget deficit hit an unprecedented $3 trillion in August, with another month to go before the end of the fiscal year, according to estimates from the Congressional Budget Office (CBO).
That figure amounts to $1.9 trillion more than the same period last year, and more than double the largest yearlong deficit on record, the CBO noted on Tuesday.
The difference comes almost entirely from increased federal spending due to the coronavirus pandemic, with revenues down just 1 percent but spending up 46 percent compared to the same period last year.
The U.S. has thus far thrown $6 trillion in relief spending at the coronavirus crisis, only half of which was covered by tax revenues and other receipts.
The Treasury Department is expected to publish the official deficit tally for August later in the week.
The CBO has estimated that the deficit for the full fiscal year ending this month will amount to $3.3 trillion, continuing to add to the nation’s growing debt.
By next year, the debt will exceed 100 percent of GDP for the first time since World War II, and will break its all-time record in the years after.
Economists broadly agree that deficit spending during a downturn can help an economy recover, and ultimately even improve the fiscal situation if steps are taken to bring down debt once the economy is humming.
Still, the magnitude of the figures is historic.
“These numbers are huge,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
“While the response sure as heck shouldn’t be to cut off recovery funds too early, it should be to deal with the debt once the economy is strong again,” she added.