Despite lawmakers and the White House failing to reach an agreement on a new round of coronavirus relief, the federal budget deficit reached a record $3.1 trillion in fiscal 2020, new estimates released Thursday show.
The federal budget deficit hit $3.1 trillion in fiscal 2020–more than tripling the $984 billion deficit from fiscal 2019, the Congressional Budget Office estimated in a monthly budget review released Thursday afternoon.
Even relative to the size of the economy, the deficit was the largest since 1945, the report notes, and marked the fifth consecutive year in which the deficit increased as a percentage of GDP.
The first six months of the fiscal year, October 2019 to March 2020, marked only an 8% increase from the 2019 shortfall, but the following six months—all well into the coronavirus pandemic—catapulted the fiscal deficit to more than eight times the shortfall in the same period last year.
This wasn’t totally unexpected: The deficit estimate of $3.1 trillion is actually $180 billion smaller than the shortfall that the CBO projected in September.
Government revenue collections totaled $3.4 trillion in the period–about $123 billion more than expected.Meanwhile, estimated outlays, or money spent, totaled roughly $6.6 trillion–just $56 million less than projected.
The actual deficit for fiscal 2020 is due out later this month, with Thursday’s estimate based on daily statements released by the Department of the Treasury.
The U.S. budget deficit is often viewed as a measure of government efficiency, and naturally, of government spending. A larger deficit typically means the government is taking on more debt, which can ultimately limit the government’s willingness–and ability–to increase spending in order to curb economic downturns, or fight pandemics, notes David Wessell, the director of The Hutchins Center on Fiscal and Monetary Policy at the Brookings Institute.
The U.S. government has been operating on a budget deficit since 2002. In 2001, the budget surplus was $128 billion. On the campaign trail in 2016, President Donald Trump said he’d work to eliminate the federal deficit in eight years. In September, White House Press Secretary Kayleigh McEnany said that President Trump plans to make addressing the ballooning national debt a “big second term priority.”