The United States budget deficit has hit a record high of $3 trillion, primarily driven by its increased spending on the pandemic relief and stimulus packages.
In the first eleven months of its financial year, the federal government spent nearly $6 trillion, including the $2 trillion on coronavirus packages, the Treasury Department said in a statement. Moreover, the figure outpaces the $3 trillion it took from tax collection.
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Not only that, but the shortfall is about double the size of the previous full-year record, which was set in 2009. At that time, the American government was grappling with the aftermath of the 2008 financial recession.
Financial experts had maintained that even before the coronavirus pandemic, the US was on its tack to record a deficit of more than $1 trillion, which also large considering historic figures. However, those projections exploded because of the increased government spending to cushion the effects of the pandemic.
Meanwhile, this month, the Congressional Budget Office predicted that the federal government was likely to run a full-year deficit of $3.3 trillion, which was more than triple the shortfall recorded in 2019. In September, the US federal government’s fiscal year ends. The agency further added that the total American debt is expected to increase to $26 trillion.
In June, the head of the US central bank, Jerome Powell, told the Congress members at a hearing that the US spending path was unsustainable and added that given the state of the economy, reducing the shortfall should not be a priority.
In the April-June period, the American economy shrank at an annual rate of 30 percent, and it was also its worst quarterly contraction on record. Meanwhile, the data further suggest that unemployment and business closures are also on the rise.
Currently, 30 percent of the US population, more than 30 million citizens, remain on unemployment benefits despite the reopening of the businesses, the Labor Department stated this week. However, in Washington, many conservatives remain leery of further spending.
This week, for more aid the republicans put forward a $300 billion proposal. But the plan failed to go further, given the opposition from Democrats.
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