The massive spending of the United States government to support the economy in the wake of the novel coronavirus pandemic has forced the US budget deficit to hit a record high of more than $3tn.
According to the data available from the country’s Treasury Department, more than $6tn, including $2tn on coronavirus programmes, has already been spent by the federal government in the first 11 months of its financial year.
That spending volume is much than the $3tn that the government took in from taxes in the sme period.
The budget deficit so far in the first 11 months of its financial year is more than double of the previous full-year record which happened in 2009. The US was under the impact of the financial meltdown of the 2008 housing financial crisis.
The US economy was slated to hit a budget deficit of more than $1tn this year even before the economy was hit by the pandemic. That amount was also large by historic standards.
But those projections have been surpassed by a huge degree because of the spending approved to try to cushion the financial impact of the virus.
The US economy was likely to run a full-year deficit of $3.3tn, which would be more than triple of the shortfall that was recorded last year, the Congressional Budget Office has predicted this month. The federal government’s financial year ends in September.
It expected total US debt to exceed $26tn, the agency said.
America’s spending path was “unsustainable”, Jerome Powell, the head of the US central bank, told members of Congress at a hearing in Washington in June. He also said that given the state of the economy, the government shot not give priority to the shortfall.
In the April-June period, the US economy shrank at an annual rate of more than 30 per cent which as the worst performance for any quarter of the US economy ever. There is a continuation of job layoffs and business closures, suggest latest data.
The US Labour Department said this week that despite the economy reopening in the country, some form of unemployment benefits are being availed by about 30 million Americans which is about 20 per cent of the American workforce.
Many conservatives in Washington, however, remain leery of further spending.
Republicans this week put forward a $300bn proposal for more aid. The plan failed to advance, with Democrats saying it fell far short of the more than $3tn in relief they support.
(Adapted from BBC.com)