WASHINGTON – The U.S. is starting the 2021 budget year the way the old year ended, with soaring deficits.
The Treasury Department reported Thursday that the federal government ran up a record October deficit of $284.1 billion, double the red ink of the same month a year ago, as revenues declined while spending to deal with the impact of the coronavirus soared.
The October deficit was double the $134.5 billion deficit logged in October 2019. It smashed the previous October record of a $176 billion deficit set in 2009, when the government was spending heavily to lift the country out of a deep recession caused by the 2008 financial crisis.
The deficit for the 2020 budget year, which ended Sept. 30, totaled a record $3.1 trillion, breaking the old mark for an annual deficit of $1.4 trillion set in 2009.
The Congressional Budget Office is projecting that this year's deficit will remain above the $1 trillion level, coming in at $1.8 trillion, the second largest annual deficit on record but an improvement over the $3.1 trillion set in 2020.
Private economists said the actual deficit this year will depend on a number of factors including whether Congress is able to narrow the differences between Democrats and Republicans to pass more coronovirus relief measures.
“The outlook for the deficit for the full fiscal year depends heavily on the course of the pandemic, the economic recovery and whether additional stimulus measures are passed,” said Nancy Vanden Houten, lead economist at Oxford Economics. She said that if Congress approved another $1 trillion in economic support that could push the deficit to $2.5 trillion next year.
For October, spending totaled $521.8 billion, up 37.3% from a year ago and a record for the month. Big increases were seen in various government agencies working to blunt the economic downturn from the coronavrious pandemic.