Posted by 03 September 2020
The Congressional Budget Office (CBO) announced this week that the projected budget deficit for 2020 will hit $3.3 trillion -- a record high gap between government revenues and spending.
The projected $3.3 trillion far exceeds the last record-high yearly deficit, which occurred in 2009. In that year, the budget deficit was $1.4 trillion. As explained in this Deep Dive, the budget deficit is when the federal government spends more than it receives in revenue in one fiscal year.
The U.S. has had a budget deficit every year since the late 1990s, and for many years prior to then. The accumulated deficits make up the national debt. The CBO projects the national debt to exceed the total Gross Domestic Product (the measure of how much economic activity occurs the U.S.) next year.
Many experts say that in the midst of an economic crisis, it is not wise to focus on deficits and debt. They argue that the federal government should spend freely to prop up the economy. Other experts counter this claim, noting that the federal government was engaged in deficit spending during good economic times, too. They say that at some point our nation's large amount of debt will hurt the economy and the ability of the government to provide services.
The new deficit numbers may affect the ongoing talks to produce another coronavirus spending bill. Democrats are pushing for a bill that contains over $3.4 trillion in new spending. Senate Republicans are likely to pass spending legislation that is around $500 billion due to many Republicans' hesitation about higher spending levels.
Are you concerned about the record-high $3.3 trillion budget deficit?