At the beginning of the year, the US Treasury forecast a $1 trillion deficit, but when coronavirus lockdowns began to be enforced in March, it was acknowledged that the figure was no longer realistic.
The deficit past year was about $1 trillion, which represented an elevated level but pales in comparison to the 2020 tally.
Federal borrowing increased by $4.2 trillion this year to $21 trillion. The largest source of tax revenue is individual income taxes, which collected $1.6 trillion in 2020.
"This astronomical level of debt is only going to get bigger", says Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
Treasury secretary Steve Mnuchin and House Speaker Nancy Pelosi are now locked in negotiations regarding another round of stimulus to breathe life into an economic recovering that appears to be stalling. With millions still facing economic uncertainty, calls will continue for further injections of federal stimulus.
Because deficits allow government spending to expand without shrinking the private sectors' wealth, they may encourage the economy to recover more rapidly following a contraction.
Historically low interest rates and low inflation, however, meant the cost of servicing higher government debt declined. The debt when Trump entered office was about $14.4 trillion.
The deficit was more than double the record of $1.4 trillion set during the 2009 economic crisis. That is less than half 2020′s tally.
The government's spending imbalance skyrocketed in April and June as the government's coronavirus relief efforts were implemented and the economy cratered. The losses were partially due to lower collections of taxes and receipts. Federal spending rose 47% to a record $6.5 trillion as the government distributed emergency loans for small businesses, and enhanced jobless benefits and stimulus payments for American households.
The measures closed large parts of the economy, including travel, trade and small businesses.
The monthly budget report reflects the historic fiscal spending used to pad the United States against the coronavirus pandemic, as well as the weakened tax income from Americans struggling through the pandemic.
But with Election Day approaching, Republican lawmakers have shown little appetite for more spending, despite the fact that millions remain unemployed and previous aid has largely dried up. At the same time, economists on Wall Street and elsewhere in the federal government emphasized the importance of new aid as the pace of recovery slows.
"Stacked up against questions about the debt, meaningful investments to improve people's lives should win every time", Angela Hanks, deputy executive director of the left-leaning Groundwork Collaborative, told the Washington Post.
Brian Riedl, a budget analyst at the conservative-leaning Manhattan Institute, warned that America's jobs recovery has already picked up the "low-hanging fruit" positions that were easy to bring back.
"The growth is leveling off". It was also $2 trillion higher than the administration had estimated in February, before the pandemic hit.
The widening deficit has stirred concern among Republicans in the Senate, who have balked at a White House proposal to spend $1.88 trillion more to spur a recovery from the steepest economic downturn since the Great Depression. In addition to the human toll, the result would be a significant drag on USA economic growth.