U.S. Budget Gap Tripled to Record $3.1 Trillion in Fiscal 2020, Treasury Says

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Wall Street Journal:

Spending soared 47% in year ended Sept. 30 as government rolled out programs to battle coronavirus and recession

As U.S. spending surged to deal with the Covid-19 pandemic, revenue fell amid widespread shutdowns and layoffs, contributing to the widening deficit.

The U.S. budget deficit tripled to a record $3.1 trillion in the fiscal year that ended Sept. 30 as the government battled the global coronavirus pandemic that has plunged the country into a recession, taken more than 217,000 American lives and thrown millions out of work.

As a share of economic output, the budget gap in fiscal year 2020 hit roughly 16.1%, the largest since 1945, the Treasury Department said Friday, when the country was financing massive military operations to help end World War II.

Federal debt totaled 102% of gross domestic product, the first time it has exceeded the size of the economy for the full fiscal year in more than 70 years, according to estimates from the Committee for a Responsible Federal Budget. That has put the U.S. in a league with Greece, Italy and Japan among the most heavily indebted nations.

Senate Republicans, citing the mounting debt, have balked at a White House proposal to spend another $1.88 trillion and House Democrats’ $2.2 trillion bill to spur a recovery from the steepest economic downturn since the Great Depression. Many economists and Federal Reserve officials say restoring growth should be the first priority, and that worries about closing the deficit can come later.

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