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WASHINGTON – The budget deficit of the United States government in February reached a record high of $ 1.05 trillion in the first five months of this budget year, as spending on dealing with the coronavirus pandemic increased at a rate well above the increase in tax revenue.
The Treasury Department said on Wednesday that the October-February deficit was 68% greater than the $ 624.5 billion deficit recorded in the same period last year.
It easily overcame the previous five-month deficit of $ 652 billion established in 2010, when the government was spending to try to lift the country out of the deep recession caused by the 2008 financial crisis.
INCREASED TRADE DEFICIT FOR 12 YEARS, THE GOVERNMENT SAYS
The Congressional Budget Office projected that the deficit for the budget year ending September 30 will be $ 2.3 trillion. However, that estimate does not include the cost of President Joe Biden’s $ 1.9 trillion COVID relief measure, which released Congress on Wednesday.
Last year’s deficit, also driven by virus relief packages, was a record $ 3.1 trillion.
Nancy Vanden Houten, a senior economist at Oxford Economics, said she estimated that the most recent relief measure would bring this year’s deficit to $ 3.4 trillion.
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The deficit for February was $ 310.9 billion, compared to $ 236.3 billion in February 2020, a month before the pandemic hit hard, shutting down companies and causing millions of job losses.
From October to February, government revenues increased 5.1%, to $ 1.44 trillion, while expenditures increased 24.7%, to $ 2.48 trillion. The deficit is the difference between income and expenses.
The deficit was driven by trillions of dollars in support approved by Congress as of last March, including a $ 900 billion measure passed in December that extended the expired emergency unemployment benefits.
Some of the big spending increases seen in the Treasury Department report include an additional $ 148 billion for the Department of Labor, with most of that increase going to pay unemployment insurance for the millions of workers who lost their jobs when the pandemic reached. There was also a $ 24 billion increase in support for the Department of Agriculture, with much of that amount to pay for increases in government food assistance programs.
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Mayra MacGuineas, chairman of the Committee for a Responsible Federal Budget, said that if all the temporary provisions of the relief plan approved on Wednesday were extended or made permanent, this could end up adding $ 4 trillion to the national debt over the next decade, double the $ 1.9 trillion advertised price.
“Despite all its shortcomings, we hope that this package will help end the pandemic and return the economy to its former strength. At that point, we will need a plan to tackle our high and growing national debt, ”said MacGuineas.