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Federal deficit at $2.8T breaks annual record with 2 months to spare

Federal deficit at $2.8T breaks annual record with 2 months to spare
© Greg Nash

The federal deficit hit $2.8 trillion for the first 10 months of fiscal 2020, breaking the previous annual record, according to figures released Wednesday by the Treasury Department.

The spike in the deficit, which is already double the largest full-year deficit on record, largely stems from the COVID-19 pandemic. The recession and lower tax revenues, combined with substantial government spending to battle the effects of the coronavirus, have created a massive hole in the federal budget for fiscal 2020, which ends on Sept. 30.

The deficit for July was considered moderate at $63 billion, as taxes delayed from the initial April 15 deadline were paid in mid-July.

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Wednesday's figures match similar data released earlier this week by the nonpartisan Congressional Budget Office, which estimated that the national debt will surpass 100 percent of gross domestic product this year for the first time since World War II.

While budget hawks have said the extraordinary spending by the government is necessary to fight COVID-19, they warned that future measures would be needed to bring down the debt.

"We have borrowed $2.8 trillion this year so far  triple what we borrowed last year," said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget.

"While this massive borrowing is exactly what we need to do to help the economy, it will need to be followed by measures to bring the debt back down once the economy has recovered," she added.