Washington, Oct 17 : The US federal budget deficit has increased to a record $3.1 trillion in the 2020 fiscal year, as the Covid-19 pandemic has prompted massive fiscal stimulus and caused tax revenue to fall, official data has revealed.
Budget deficit for the fiscal year, which ended September 30, was $2.1 trillion higher than that of the prior year, according to the final budget results for fiscal year 2020 jointly released by Treasury Department and White House Office of Management and Budget on Friday.
The spike in the deficit reflects the effect of Covid-19 on the economy and legislation to protect public health and support hard-hit industries, businesses, and individuals, including the $2.2-trillion Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, approved by Congress in March, Xinhua news agency reported.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a non-partisan watchdog group, noted that the US federal government ended the fiscal year with $21 trillion of debt, “which means debt is now larger than a year’s worth of economic output”.
“Borrowing to combat the pandemic and economic crisis makes sense. But that’s no excuse for the massive tax cuts and spending increases enacted before the pandemic, nor the failure to control the rising costs of our health and retirement programs once normalcy returns,” MacGuineas said in a statement.
Under the agendas of both presidential candidates, debt would reach at least 125 per cent of gross domestic product by 2030, the committee noted.
“It’s disappointing to see both candidates for president proposing trillions of dollars in additional debt instead of plans to save Social Security and Medicare,” MacGuineas said.
“The deeper we dig this hole, the harder it will be to claw our way out.”