The coronavirus relief spending blowout and recession pushed the federal deficit to a record-busting $3.1 trillion in fiscal 2020, three times the previous year’s budget shortfall, the Trump administration said Friday.
The previous year’s deficit was $984 billion, by comparison. The administration projected a $1.1 trillion deficit for fiscal 2020 in February.
In a joint statement, Treasury Secretary Steven Mnuchin and Office of Management and Budget Director Russell Vought said government tax receipts totaled $3.42 trillion, $42 billion or 1 percent less than the previous year.
Meanwhile, spending catapulted to $6.55 trillion, $2.1 trillion or a 47 percent increase above fiscal 2019. The report attributed the surge in spending to four laws passed to provide pandemic relief and increased use of federal programs such as unemployment insurance.
Despite the surge of red ink, the officials said the economy “has begun an incredible comeback,” with 52 percent of the jobs lost during the pandemic recovered over the past five months. They pointed to the unemployment rate declining each month since its peak in April, falling to 7.9 percent in September.
Mnuchin credited President Donald Trump’s “pro-growth policies” and COVID-19 relief legislation for a “strong economic recovery.”
Total federal borrowing from the public increased by $4.216 trillion to $21 trillion in fiscal 2020, the agencies said. The Committee for a Responsible Federal Budget said that would equal 102 percent of total U.S. economic output, a first since the end of World War II.
The Congressional Budget Office last week also estimated a $3.1 trillion deficit result for the fiscal year that ended Sept. 30. The CBO said that figure would equal around 15 percent of gross domestic product. That would be the largest deficit as a share of GDP since 1945, the nonpartisan budget office said.
Deficits are projected to decline to $1.8 trillion in the current fiscal year and then dip further before rebounding after fiscal 2024, according to the most recent 10-year outlook from the CBO last month. But deficits will remain above $1 trillion for the foreseeable future, with debt hitting $30 trillion by fiscal 2028.
“This astronomical level of debt is only going to get bigger,” CRFB President Maya MacGuineas said in a statement. “The deeper we dig this hole, the harder it will be to claw our way out.”