The federal deficit rose to a record $ 3.1 trillion in fiscal 2020, according to Treasury Department figures released on Friday.
That number is more than 2 1/2 times the previous record, which was $ 1.4 trillion in 2009 at the height of the Great Recession.
The deficit was already on track, exceeding $ 1 trillion for the first time in eight years prior to the COVID-19 pandemic, sparking a gigantic response from Congress to the economy to prop up the economy.
Economists broadly agree that deficit spending is vital in times of crisis to prevent deeper and longer downturns, but say that debt needs to be addressed when the economy recovers.
“We should borrow now, but once the economy recovers, our debt cannot forever grow faster than the economy,” said Maya MacGuineas, president of the Federal Responsible Budget Committee, a budget watchdog group.
MacGuineas does not plan to change the debt path after the election, no matter who wins.
Do me a favor: please SHARE this post.
“It is disappointing to see both presidential candidates propose trillions in additional debt rather than social security and medical rescue plans. The deeper we dig this hole, the harder it will be to find our way out, ”she added.
Budget hawks were critical of those who monitored a sharp spike in deficit spending during a year of strong economic growth prior to the pandemic. His signed tax cuts in 2017 are expected to increase the deficit by an estimated $ 1.9 trillion over a decade, while pushing for higher defense spending.
The Democrats, meanwhile, insisted on higher domestic spending. The merger has led to a significant increase in the deficit since 2016.
But it was the amount of unprecedented emergency relief bills this year that added trillions more to the deficit for fiscal 2020, which ended September 30th.
The country’s accumulated debt has surpassed an estimated 100 percent of GDP in recent months for the first time since World War II, and is on what the impartial Congressional Budget Office calls “unsustainable”.
In response to the new Treasury figures, the Trump administration pointed to pre-pandemic economic growth.
“Thanks to the growth-promoting policies of President Trump and the bipartisan CARES law, we are seeing a strong economic recovery,” said the Treasury Secretary, referring to the record legislation passed by Congress in March of 2.2 trillion US dollars.
Mnuchin is currently negotiating with Speaker (D-Calif.) About a new coronavirus aid package. Trump has signaled his willingness to increase the supply of Democrats to over $ 1.8 trillion, despite Senate Republicans strongly opposed to getting a much smaller $ 500 billion bill passed.
Democrats, whose original offer was $ 3.4 trillion, passed a reduced $ 2.4 trillion bill in the house earlier this month.
However, the prospects for a deal that can happen to both houses of Congress remain slim. .
–
