The federal government's budget gap widened significantly in the first nine months of the fiscal year, as tax receipts slumped and spending increased.
Congressional forecasters expect the federal deficit will hit the second largest in decades, even without factoring in President Biden's proposed $1.9 trillion coronavirus relief plan.
Congressional forecasters expect the federal deficit to reach $3.3 trillion during the current fiscal year. By 2023, government debt will reach an all-time high of 107% of GDP.
The federal deficit is ballooning as the government tries to cushion the blow from the coronavirus pandemic. June's shortfall totals $864 billion — more than in an entire typical year.
In a single quarter, the government will borrow more than twice as much as it did all of last year, as the cost of the coronavirus pandemic dwarfs previous deficits.
The economic rescue package just passed by Congress will push this year's budget deficit above $3 trillion. Such huge levels of deficit spending used to set off alarm bells in Washington, but no more.
William Hoagland, who for years helped shape GOP budget policy, says the public just doesn't see rising deficits as a major issue at a time when the economy is doing well.
The president said it would be "rocket fuel for our economy," but the Republican tax cut passed in 2017 did not pay for itself as promised — nor did it deliver a sustained boost to growth.
The deficit is expected to swell to $960 billion this year and average $1.2 trillion in each of the next 10 years, according to congressional budget forecasters. They also expect the economy to slow.
Liberal Democrats have embraced an obscure brand of economics — "modern monetary theory" — to make the case for deficit-financed government programs like the Green New Deal for clean energy and jobs.