The federal budget deficit for the first quarter of fiscal year 2021 totaled $572 billion, up $215 billion from the same period a year earlier, the Congressional Budget Office estimated on Monday. Spending was up 18%, while receipts fell 0.4%. If not for a shift in the timing of certain payments, the deficit would have been $525 billion.
The Committee for a Responsible Federal Budget estimated earlier this month that the fiscal year 2021 deficit is on pace to total $2.3 trillion, or 10.4% of gross domestic product, but that projection did not include the official cost estimate for the Covid relief and government funding package passed by Congress last month — and it doesn’t include the cost of additional coronavirus stimulus and other legislation being called for by President-elect Joe Biden. Biden said last week that his proposal will come with a price tag “in the trillions of dollars.”
Why it matters: “Economists largely agree that deficit-financed spending is a good idea during an economic crisis, but their estimates of how much is necessary vary dramatically,” The Hill’s Niv Elis notes. “Many warn that the accumulated debt will have to be addressed once the economy recovers.”