The United States' budget shortfall has skyrocketed three-fold to an all-time high $3.1 trillion in the fiscal year ending Sept. 30 as the federal government struggled with an ongoing global health emergency that dragged the U.S. economy into a recession and claimed over 217,000 American lives and rendered millions jobless.
In an announcement made by the U.S. Treasury on Friday, the current deficit is the biggest yearly deficiency in the country's history. As a share of economic output, the current year's budget shortfall reached more than 16 percent, the highest since 1945 when the government was shelling out a huge amount of money to fund military operations to help stop the second world war.
The massive hike from last year's almost $1 trillion shortfall was propelled by the government's response to the pandemic, which included immense levels of financial support for individuals and loans for small businesses. "Today's shortfall figure is the result of six months of containing the coronavirus pandemic and its economic fallout," the Wall Street Journal quoted William Hoagland, senior vice president at the Bipartisan Policy Center, as saying.
The Trump administration on Friday disclosed that the budget deficit for the current year was three times bigger compared to 2019's $984 billion deficit. The figure was also $2 trillion bigger compared to what the administration had projected in February before the coronavirus broke out.
Government debt reached more than 100 percent of gross domestic product (GDP) -- the sum of all products and services generated by a country -- the first time it has surpassed the size of the U.S. economy for the full fiscal year in over seven decades, estimates from the Committee for a Responsible Federal Budget showed. The figure has placed the U.S. on the same page with Japan, Italy, and Greece among the heavily- indebted countries in the world.
Though a fresh, trillion-dollar pandemic stimulus measure has been proposed in discussions in Washington, some type of emergency funding legislation is seen to pass in the next couple of weeks or even months as part of steps to prevent the U.S. economy from sinking deeper.
Trump has asserted that he's willing to strike up a deal with Democrats on a new stimulus boost, but Senate Republicans have said they don't agree to spend levels being proposed by Democrats. Many economists and officials from the central bank argue reviving growth should be the main focus, and that concerns regarding ending the deficit can be done later.