WASHINGTON (CN) — The U.S. government’s budget deficit skyrocketed during the fiscal year 2020 with more than $3.1 trillion in the red, according to a report released Friday by the Treasury Department.
This fiscal year, which ended Sept. 30, saw a record budget deficit more than three times that of the 2019 deficit, following a massive federal spending surge related to coronavirus-driven economic relief efforts. Last year, the budget deficit – which is the gap between government spending and tax revenue – was $984 billion.
The report released jointly by the White House and the Treasury Department on Friday shows that government spending amounted to more than $6.5 trillion this year, which is up from $4.4 trillion in 2019. It also shows that the 2020 deficit represents 15.2% of total gross domestic product, the highest percentage since World War II.
According to the Treasury Department, the record-breaking deficit for the 2020 fiscal year – surpassing the previous record of $1.4 trillion in 2009 – was mostly due to hefty spending on pandemic relief efforts aimed at bolstering business and employment after the U.S. economy began to tank in March.
“The increase in the deficit from FY 2019 reflects the effect of Covid-19 on the economy and legislation that created or enhanced programs to protect public health and support hard-hit industries, small businesses, and American individuals and families,” the department said in a statement.
In particular, the deficit was driven by the Coronavirus Preparedness and Response Supplemental Appropriations Act, Families First Coronavirus Response Act, CARES Act and Paycheck Protection Program and Health Care Enhancement Act, all passed by Congress earlier this year.
The soaring deficit is also the result of a 1% decrease in corporate and personal tax revenue, the Treasury Department said. The government banked about $3.4 trillion in tax revenue this year, which is a narrow decrease compared to the revenue garnered in 2019.
To coincide with Friday’s data, Treasury Secretary Steven Mnuchin and Office of Management and Budget Secretary Russ Vought released a joint statement in which they expressed unrestrained praise for President Donald Trump and predicted an economic recovery without providing much evidence.
Mnuchin said the bipartisan CARES Act and “President Trump’s pro-growth policies” are contributing to a “strong economic rebound.”
When Trump took office in 2016, he vowed to erase the federal government’s overall debt within two terms. But the debt has since increased from about $14.4 trillion to around $21 trillion.
As the Trump administration officials pointed out on Friday, federal debt was on the rise before the virus struck the U.S. economy.
“As the country continues to open up and this administration pursues its pro-growth agenda, our economy will continue its robust recovery, sending Americans back to work and improving our fiscal picture,” Vought wrote in the statement.
Now, Congress is in the midst of contentious negotiations over a new coronavirus relief package. Democrats are seeking more than $2 trillion for the next round of aid out of Washington, but Senate Republicans are increasingly reluctant. It is unlikely a deal will get done before the Nov. 3 election.