U.S. Budget Deficit Widened 454% in March -- 3rd Update
By John McCormick
Federal spending soared in March as the government sent a third
round of stimulus payments to Americans, pushing up the budget
deficit to a record $1.7 trillion in the first half of the fiscal
The budget gap is now more than double what it was for the same
period a year ago, the Treasury Department said Monday. The
Covid-19 pandemic and related shutdowns sent the economy into a
tailspin starting in March 2020.
The deficit was $660 billion last month, 454% higher than it was
in the same month a year ago. Revenue rose 13% to $268 billion,
while spending increased 161% to $927 billion.
The government's spending surge has provided some cushion to the
economy from the pandemic's devastation, but it has also sent
deficits soaring to levels not seen since the end of World War II
as a proportion of the economy. Weaker tax revenue has contributed
to the shortfall.
"The increase in the deficit since before the pandemic is hard
to wrap one's head around," said Wendy Edelberg, a former
Congressional Budget Office chief economist who in June became
director of the Hamilton Project, a think tank affiliated with the
"But we have to understand those numbers in the context of the
crisis we are living through," she said. "The pandemic has led to a
temporary loss of more than 10 million jobs. The robust fiscal
response has made me more optimistic about our economic
Outlays from October through March rose to $3.4 trillion, an
increase of 45%. Receipts rose 6% to $1.7 trillion.
Budget deficits are likely to remain at the center of debates
over the Biden administration's next major legislative effort: a
roughly $2.3 trillion proposal that aims to bolster long-term
economic growth through investments in infrastructure, clean energy
A bipartisan group of lawmakers was set to meet with President
Biden Monday about his $2.3 trillion infrastructure proposal, as
Republicans and Democrats seek to determine whether they can reach
an agreement on such a package's size, scope and funding.
Republicans have criticized several aspects of the plan,
including proposed tax increases on corporations and the broad
scope of the spending. Some GOP lawmakers have instead pushed for
the White House to advance a much narrower infrastructure bill.
Higher costs for unemployment benefits, nutrition assistance,
healthcare and assistance to small businesses pushed government
spending higher, while stronger corporate tax collection and
remittances from the Federal Reserve lifted revenue, Treasury
The budget gap is on track to widen further, following enactment
of a $1.9 trillion aid package passed last month with only
Democratic votes that provided another round of stimulus checks for
many Americans, extended enhanced jobless benefits and provided
billions of dollars for vaccine distribution and school
The Congressional Budget Office projects the deficit for the
fiscal year ending Sept. 30 will total $2.3 trillion, almost $1
trillion less than last year's record gap but more than officials
projected in September.
Even before the latest aid package was passed, the CBO projected
that federal debt would equal 102% of gross domestic product in
2021. It has exceeded that level only twice before in U.S. history,
in 1945 and 1946, following a surge in federal spending as a result
of World War II.
Treasury officials said Fed remittances sent to the government
have increased 33% so far this fiscal year compared with last year,
as lower interest rates have held down the central bank's costs and
its growing portfolio of securities has yielded greater income.
Write to John McCormick at firstname.lastname@example.org
(END) Dow Jones Newswires
April 12, 2021 16:25 ET (20:25 GMT)
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