On Wednesday (Feb. 10), the U.S. Treasury Department said the U.S. budget shortfall totaled a record $736 billion in the first four months of fiscal year 2021, an 89 percent increase compared with the same period last year.
Last month, as the U.S. Treasury reached a $900 billion economic bailout deal in Congress in December, it issued another round of stimulus checks and other federal aid, causing federal spending to climb, thus widening the budget deficit for the fiscal year.
The U.S. Treasury noted that the budget shortfall for the first four months of fiscal 2021 totaled a record $736 billion as government spending exceeded revenue, with collections totaling nearly $1.2 trillion, up 1 percent from October to January, while spending increased a record 23 percent to $1.9 trillion, largely due to increased spending on programs such as unemployment benefits and Medicaid.
In the 12 months to January, the U.S. deficit totaled $3.47 trillion, or 16.2 percent of economic output.
U.S. media outlet The Wall Street Journal reported that increased spending to stave off a coronavirus (a Chinese communist virus) pandemic and ease the U.S. economy, combined with weak tax revenues, has sent the U.S. deficit soaring over the past year to its highest level since the end of World War II. The rising deficit is now at the center of congressional debate over whether members of Congress should approve more spending to boost the economy and support families and businesses until the pandemic is under control.
Congress enacted the roughly $900 billion bill in late December, which went into effect last month and increases federal spending in early 2021. The most expensive of those appropriations was $142 billion in stimulus spending, of which $139 billion was paid in January. The Treasury Department said it will continue to provide $25 billion in rent grants to state and local governments.
Some Republicans have warned that further stimulus spending could hurt the country’s long-term fiscal position, but policymakers, including Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell, have supported moving forward with the new relief package, saying the potential costs of doing too little to prop up the economy outweigh the The risk of doing too much.
So far this fiscal year, spending at the Department of Agriculture, which administers the nutrition assistance program, has increased 36 percent, and spending at the Department of Labor, which administers unemployment benefits, has increased 10-fold, the Treasury Department said. Meanwhile, payments on the federal debt are down 18 percent from a year ago, as interest rates remain at historic lows.
Since last summer, federal revenues have improved since the beginning of the pandemic as economic activity has recovered, businesses have reopened and unemployment has fallen. The Treasury Department said remittances from the Federal Reserve have increased 35 percent since last summer, and total corporate tax receipts have risen 18 percent. Still, revenues for the 12 months ending in January were down 2.8 percent from a year earlier.
Recent Comments