You are here: Home » International » News » Economy
Business Standard

US budget deficit debt to hit $3.3 trillion, bigger than its economy's size

The spike in the deficit means that federal debt will exceed annual gross domestic product next year

Topics
US economy | Coronavirus | US debt

AP | PTI  |  Washington 

dollar, fpi, investment, FDI
The $3.3 trillion figure is more than triple the 2019 shortfall and more than double the levels experienced after the market meltdown and Great Recession of 2008-09

The federal budget deficit is projected to hit a record $3.3 trillion as huge government expenditures to fight the and to prop up the have added more than $2 trillion to the federal ledger, the Congressional Budget Office said.

The spike in the deficit means that federal debt will exceed annual gross domestic product next year — a milestone that would put the US where it was in the aftermath of World War II, when accumulated debt exceeded the size of the

The $3.3 trillion figure is more than triple the 2019 shortfall and more than double the levels experienced after the market meltdown and Great Recession of 2008-09. Government spending, fuelled by four response measures, would register at $6.6 trillion, $2 trillion-plus more than 2019.

The recession has caused a drop in tax revenues have fallen, but the changes are not as dramatic as seen on the spending side, with individual income tax collections running 11 per cent behind last year. Corporate tax collections are down 34 per cent. The shut down in the spring so people could be in isolation, in a failed national attempt to defeat the pandemic.

That shutdown led lawmakers and President to pump money into business subsidies, larger unemployment benefits, $1,200 direct payments and other stimulus steps that have helped the economy in the short term.

Most economists are untroubled by such huge borrowing when the economy is in peril, and the debt was barely a concern when a cornerstone $2 trillion relief bill passed almost unanimously in March. But now that lawmakers and the White House are quarrelling over the size and scope of a fifth virus relief bill, Republicans are growing skittish at the enormous costs of battling the pandemic.

First Published: Fri, September 04 2020. 01:55 IST
RECOMMENDED FOR YOU
.