US budget deficit this year nearly doubles previous record

The US federal budget deficit for the first six months of the fiscal year swelled to $1.7 trillion as more stimulus outlays added billions of dollars to government spending last month.

In its monthly budget report, the US Department of the Treasury said Monday that the deficit for the first half of the budget year — from October through March — was up from a shortfall of $743.5bn for the same period a year ago.

The deficit has been driven higher by trillions of dollars in support that Congress has passed in successive economic rescue packages since the coronavirus pandemic struck in early March 2020. The latest round came in a $1.9 trillion measure that President Joe Biden pushed through Congress last month.

Biden’s package included individual support payments of up to $1,400 and the administration rushed to make those payments as soon as Biden signed the measure into law. The Treasury statement showed that the payments in March totaled $339bn.

The budget report showed that the deficit for just March totalled $659.6bn, the third-highest monthly deficit. For the six-month period, the $1.7 trillion deficit total surpassed the previous record of an $829bn deficit that was run up for the six months ending in March 2011, a period when the government was spending to deal with the adverse effects of the recession caused by the 2008 financial crisis.

Last year’s deficit, for the budget year that ended September 30, totalled a record $3.1 trillion. The Congressional Budget Office estimated in February that this year’s deficit would total $2.3 trillion. But that estimate did not include the cost of Biden’s $1.9 trillion rescue plan that Congress passed in March or the impact of Biden’s Build Back Better infrastructure proposal that Congress is considering now.

SOURCE: AP

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