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The US Budget Deficit and the Public Debt
The US federal budget deficit has hit an all-time high of $3.1 trillion in the 2020 budget year (September), “more than double the previous record, as the coronavirus pandemic shrank revenues and sent spending soaring”:
“…the deficit for the budget year that ended on September 30 was three times the size of last year’s deficit of $984bn. It was also $2 trillion higher than the administration had estimated in February, before the pandemic hit”
It was the US government’s largest annual shortfall in dollar terms, surpassing the previous record of $1.4 trillion set in 2009. At that time, the administration of President Barack Obama was spending heavily to shore up the nation’s banking system and limit the economic damage from the 2008 financial crisis.
The 2020 deficit, in terms of its relationship to the economy, represented 15.2 percent of total gross domestic product (GDP), the sum of all the goods and services produced by the country. That was the highest level since 1945, when the US was borrowing heavily to finance World War II.
The administration’s final accounting of the 2020 budget year shows that revenues fell by 1.2 percent to $3.42 trillion, while government spending surged 47.3 percent to $6.55 trillion. That spending reflects the relief programmes Congress passed in the spring to support the economy as millions of Americans were losing their jobs.
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