Pandemic Drives US 2020 Budget Deficit to Record $3.1 Trillion

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Pandemic Drives US 2020 Budget Deficit to Record $3.1 Trillion

For a record of $ 3.1 trillion In fiscal year 2020, the United States budget deficit arrived, according to data from the United States Department of the Treasury, released on Friday. The number is three times what the White House estimated just eight months ago last February, reported Bloomberg.

The loss relative to the overall size of the economy is the largest in the past 75 years, since World War II. In the immediate term, the percentage increased to 16% of gross domestic product (GDP) second bedroom. Scenario that exceeds the effects of the last financial crisis, when this proportion approached 10% in 2009.

Due to the series of compensations decreed by the government to contain the effects of the coronavirus, federal spending increased by 47.3% in the last fiscal year, reaching a total of US $ 6.55 trillion. Disbursements covered unemployment benefits and financial assistance for small businesses, among other mitigations.

According to the report, in addition, government revenues have decreased. In this way, the crisis deepens despite other emerging measures raised by the Federal Reserve to keep borrowing costs low for years to come.

In this context, experts believe that the debt will continue to increase for the next three decades. Meanwhile, the long-term outlook from the Congressional Budget Office projects that federal debt can reach 195% of GDP in 2050.

The covid-19 outbreak would not be solely responsible. Even before the pandemic, a large deficit was already anticipated due to unfunded tax cuts, the increased defense spending and other national priorities promoted by President Donald Trump, The Hill reported.

In turn, the Responsible Federal Budget Committee predict Considering that in 2020 the public debt of the United States “increases dramatically” to 98% of national GDP (compared to 35% in 2007, before the previous recession) more than 100% in 2021.

“It’s hard to believe that we now owe him a year of production […] We shouldn’t cross that threshold in more than a decade, but here we are. The debt is the size of the current economy and soon you will be older than at any other time in history, “said committee chair Maya MacGuineas.