The budget deficit of the US government is estimated to reach a record of $ 3,300 billion. The budget deficit is expected to hit a record high, given the ongoing spending to tackle Covid-19 and stimulus measures of more than $ 2,000 billion to boost the economy. The Congress Budget Office has made this estimate. The deficit increase means that federal debt will surpass GDP annually next year. This situation will be exactly the same as it was after the second world war. At that time the cumulative debt exceeded the size of the economy.
More than three times the 2019 deficit
The $ 3,300 billion estimates released on Wednesday is more than three times the 2019 deficit. At the same time, the rate of softening in 2008-09 is twice. On one hand, while the government’s expenses are increasing, on the other hand, the tax revenue has come down due to the recession. Personal income tax collections are down 11 percent over the previous year, while company tax collections are running 34 percent less.
Corona hit on the economy and employment of people
The economy was shut down for the prevention of coronavirus. This had an impact on the economy and employment of the people. Direct relief and incentive measures of $ 1,200 were announced to relieve those who lost their jobs. This brought relief to the economy in the short run.
MPs are getting confused about the size of the relief package
Given the increased spending, lawmakers and the White House are mulling over the size of the fifth virus relief package. Republican lawmakers have begun to worry about rising costs to deal with the epidemic, while the Democratic-controlled House passed a $ 3,500 billion package in May. However, Speaker of the House Nancy Pelosi has expressed a desire to reduce this to $ 2,200 billion.