U.S. budget deficit hits $3.1 trillion

$2.2 trillion relief package accounted most of spending

The federal budget deficit soared to a record $3.1 trillion in the 2020 fiscal year, official figures showed on Friday, as the coronavirus pandemic fueled a surge in spending and a drop in tax receipts brought by households and businesses struggling with economic shutdowns.

The federal government spent $6.55 trillion in 2020, while tax receipts and other revenue trailed at $3.42 trillion. Much of the spending came from the $2.2 trillion economic relief package that Congress passed in March, which was financed by government borrowing. Total debt held by the public topped $21 trillion at the end of September, a record level.

The shortfall underscores the long-term economic challenge facing the United States as it tries to emerge from the sharpest downturn since the Great Depression. Interest rates are low — meaning it costs less for the government to borrow money — but the ballooning deficit is already complicating policy choices as Republicans resist another large stimulus package, citing concerns about the U.S. debt burden.

The deficit — the gap between what the U.S. spends and what it earns through tax receipts and other revenue — was $2 trillion more than what the White House’s budget forecast in February. It was also three times as large as the 2019 deficit of $984 billion.

According to the nonpartisan Committee for a Responsible Federal Budget, the nation’s debt has now surpassed the size of the economy, amounting to 102 percent of gross domestic product.

“It is hard to believe we now owe a full year’s worth of output,” said Maya Macguineas, president of the committee. “We weren’t supposed to cross this threshold for over a decade, but here we are.”

Macguineas noted that the last time America’s debt exceeded the size of the economy was at the end of World War II, and that it took years of balanced budgets to bring it down.