US Budget Deficit Hits $1 Trillion In Just 5 Months

The federal budget deficit for the fiscal year 2021 ballooned to $1 trillion in just five months (October – February) – the fastest rise to that level in US history. And that does not include any spending on President Biden’s $1.9 trillion stimulus package passed earlier this month, or the upcoming $3 trillion infrastructure boondoggle the White House is expected to announce any day now.

The budget deficit for FY2019 was $1.1 trillion; then it exploded to a new record of $3.3 trillion in FY2020 according to the Congressional Budget Office (CBO). This fiscal year it is expected to be at least $3.4 trillion – and this estimate may be too low, depending on how much of the $1.9 trillion stimulus and the expected $3 trillion infrastructure spending happens this year.

US debt is clearly out of control and is on track to exceed $30 trillion by the end of this year. Politicians on both sides of the aisle in Washington have thrown all caution to the wind with respect to the national debt. It’s as if people believe we can borrow and spend all the money we want. Yet deep down, I think we all know this movie doesn’t end well in the end.

In case you look it up, the CBO’s official estimate of the US FY2021 budget deficit is currently only $2.3 trillion. However, this projection was last updated in early February, well before President Biden’s $1.9 trillion stimulus bill was passed. The CBO’s next deficit estimate is widely expected to be well north of $3 trillion.

In its long-term forecast, the CBO projects annual budget deficits of $1.2 trillion a year from 2022 to 2031, thus adding an additional $12 trillion to the national debt. But these projections are also probably way too low – unless the bond market revolts – as it certainly will at some point. That’s a different topic for another day.

The “National Debt” Vs. “Debt Held By The Public”

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