US deficit for current budget year climbs to US$2.24 trillion

WASHINGTON: The US government's deficit for the first nine months of this budget year hit US$2.24 trillion, keeping the country on track for its second biggest shortfall in history.

In its monthly budget report, the Treasury Department said Tuesday that the deficit for the budget year that ends in September is running 9.1 per cent below last year's pace.

The deficit for the full 2020 fiscal year was a record US$3.1 trillion. The Congressional Budget Office is projecting that this year's deficit will total a slightly smaller US$3 trillion. The deficits in both years were bloated by the multitrillion-dollar spending packages the government has passed to combat the economic downturns caused by the coronavirus pandemic.

Before the coronavirus pandemic, the previous deficit record was US$1.4 trillion, set in 2009 when the government was seeking to offset a steep economic downturn triggered by the 2008 financial crisis.

So far this fiscal year, government receipts have totalled US$3.06 trillion, up 35.2 per cent from the same period a year ago. The number for last year was pushed downward by the fact that various tax deadlines were delayed, so revenue collections were lower because payments came in after June.

Spending in the October-June period totalled US$5.29 trillion, up 5.8 per cent from the same period last year.

For the month of June, the deficit totalled US$174.2 billion, 79.8 per cent lower than the June 2020 deficit of US$864.1 billion, which was record high for any month.

The huge June 2020 deficit included US$511 billion spent by the Small Business Administration, primarily for its Paycheck Protection Program of forgivable loans made to small businesses. By contrast, that spending category totalled just US$31 billion in June of this year.

After the slight drop in the deficit this fiscal year, the CBO is projecting a further improvement to a US$1.15 trillion shortfall next year.

However, those forecasts do not take into account the multitrillion-dollar infrastructure spending measures President Joe Biden is pushing to get Congress to approve. In his own budget, Biden is projecting the deficit will hit US$3.7 trillion this year and will never dip below US$1 trillion over the next decade.