US federal budget deficit projected to hit record USD 3.3 trillion
United State’s federal budget deficit is projected to hit a record USD 3.3 trillion as huge government expenditure to fight the coronavirus and to prop up the economy have added more than USD 2 trillion to the federal ledger, the Congressional Budget Office said.
The spike in the deficit means that federal debt will exceed annual gross domestic product next year – a milestone that would put the US where it was in the aftermath of World War II, when accumulated debt exceeded the size of the economy. The USD 3.3 trillion figure is more than triple the 2019 shortfall and more than double the levels experienced after the market meltdown and Great Recession of 2008-09.
Government spending, fuelled by four coronavirus response measures, would register at USD 6.6 trillion, USD 2 trillion-plus more than 2019. The recession has caused a drop in tax revenues have fallen, but the changes are not as dramatic as seen on the spending side, with individual income tax collections running 11 per cent behind last year.
Lockdown led lawmakers and President Donald Trump to pump money into business subsidies, larger unemployment benefits, USD 1,200 direct payments and other stimulus steps that have helped the economy in the short term.