Arab Times

US bud­get deficit hits record $3tn

For first 11 months

- Business · Finance · Politics · Congressional Budget Office · Oxford

WASH­ING­TON, Sept 12, (AP): The US bud­get deficit hit an all-time high of $3 tril­lion for the first 11 months of this bud­get year, the Trea­sury Depart­ment said Fri­day.

The ocean of red ink is a prod­uct of the gov­ern­ment’s mas­sive spend­ing to try to cush­ion the im­pact of a coron­avirus-fu­eled re­ces­sion that has cost mil­lions of jobs.

The deficit from Oc­to­ber through Au­gust is more than dou­ble the pre­vi­ous 11-month record of $1.37 tril­lion set in 2009. At that time the gov­ern­ment was spend­ing large sums to get out of the Great Re­ces­sion trig­gered by the 2008 fi­nan­cial cri­sis.

With one month to go in the 2020 bud­get year, which ends Sept 30, the deficit could go even higher. The Con­gres­sional Bud­get Of­fice is fore­cast­ing the deficit this year will hit a record $3.3 tril­lion.

While the gov­ern­ment has some­times run sur­pluses in Septem­ber, Nancy Vanden Houten, an econ­o­mist at Ox­ford Econ­o­mist, pre­dicted the Septem­ber deficit would hit $200 bil­lion, giv­ing the coun­try a deficit for this bud­get year of $3.2 tril­lion.

That would be well above last year’s im­bal­ance of $984 bil­lion. The pre­vi­ous record deficit for a fis­cal year was $1.4 tril­lion in 2009 in the af­ter­math of the fi­nan­cial cri­sis.

Congress has passed a se­ries of re­lief bills to­tal­ing nearly $3 tril­lion that pro­vided sup­port such as a $600-aweek boost in un­em­ploy­ment ben­e­fits, up to $1,200 in pay­ments to in­di­vid­u­als and aid for small busi­nesses try­ing to re­tain their work­ers.

How­ever, many of the sup­port pro­grams ended in early Au­gust and ef­forts to ap­prove an­other mea­sure to re­store the ex­pired pro­grams have so far failed in Congress. That has raised con­cerns among economists that with so many peo­ple still out of work and so many busi­nesses strug­gling to re-open, the eco­nomic re­cov­ery could wither by late this year.

The deficit for Au­gust to­taled $200 bil­lion, match­ing the Au­gust 2019 deficit and re­flect­ing the fact that with re­lief pro­grams ex­pir­ing, the gains in monthly gov­ern­ment

spend­ing slowed.

The CBO is fore­cast­ing that by the end of this year, the amount of gov­ern­ment debt will equal 98% of the to­tal econ­omy and then next year it will ex­ceed 100% of gross do­mes­tic prod­uct, the econ­omy’s to­tal out­put of goods and ser­vices. That’s a level not seen since the huge gov­ern­ment debt buildup in the 1940s to pay for fight­ing World War II.

By com­par­i­son, the debt held by the pub­lic to­taled 79% of GDP at the end of 2019 and stood at 35% of GDP in 2007 be­fore the Great Re­ces­sion.

Even with huge amounts of debt be­ing added, the gov­ern­ment’s in­ter­est costs to fi­nance the debt are ac­tu­ally down 10% this year to $484 bil­lion com­pared to what the gov­ern­ment spent on in­ter­est pay­ments last year. Trea­sury of­fi­cials said the lower fig­ure is due to lower in­ter­est rates this year as the coun­try went into re­ces­sion.

 ??  ?? In this file photo, a man wear­ing a mask to pro­tect against coron­avirus, waits to cross the street as a dig­i­tal sign dis­plays groups of peo­ple walk­ing above an­other sign dis­play­ing the size of the na­tional debt along an empty K Street in Wash­ing­ton. The US bud­get deficit hit an all-time high of $3 tril­lion for the
first 11 months of this bud­get year, the Trea­sury Depart­ment said on Sept 11. (AP)
In this file photo, a man wear­ing a mask to pro­tect against coron­avirus, waits to cross the street as a dig­i­tal sign dis­plays groups of peo­ple walk­ing above an­other sign dis­play­ing the size of the na­tional debt along an empty K Street in Wash­ing­ton. The US bud­get deficit hit an all-time high of $3 tril­lion for the first 11 months of this bud­get year, the Trea­sury Depart­ment said on Sept 11. (AP)

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