Calgary Herald

U.S. budget deficit grows to US$1.88T amid spending blitz in response to virus

- JEFF STEIN

WASHINGTON The federal response to the coronaviru­s outbreak is pushing the U.S. government’s budget deficit to unpreceden­ted levels.

On Wednesday, the Department of Treasury said the gap between what the U.S. government spends and what it collects in taxes widened to US$1.88 trillion for the first eight months of this fiscal year — a record high. America’s federal deficit for all of 2019 was US$984 billion, which was already considered unusually large.

The soaring deficit reflects the huge spending increases approved by Congress in response to the economic downturn caused by the outbreak. Most economists say the spending was necessary to stabilize an economy rocked by double-digit unemployme­nt and a severe contractio­n in economic growth.

Those efforts are exacerbati­ng America’s fiscal imbalance. The non-partisan Congressio­nal Budget Office has estimated the federal deficit will hit US$3.7 trillion by the end of this fiscal year. The Committee for a Responsibl­e Federal Budget pegged the number at US$3.8 trillion.

“If policy-makers had spent the past five years addressing the debt rather than passing massive tax cuts and spending hikes, we could have offered more economic support and still had lower deficits,” said Marc Goldwein, senior vice-president at the Committee for a Responsibl­e Federal Budget.

In April, the monthly budget deficit rose to a record US$738 billion. The monthly deficit for May came in at about US$400 billion, a substantia­l decrease from April but still far beyond normal levels. These estimates do not include the impact of the approximat­ely Us$600-billion rescue effort for small businesses, Treasury officials said. That funding is classified as a loan rather than an expenditur­e.

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