The federal budget deficit exceeded $ 3 trillion in August, according to official Treasury data released on Friday, and is expected to reach $ 3.3 trillion when the fiscal year ends later this month.
Figures that confirm earlier estimates by the Congressional Budget Service (CBO) show that the deficit is on track to be the largest in the country’s financial history. The $ 3.3 trillion figure is much more than twice the previous high of $ 1.4 trillion in 2009, during the financial crisis.
Data released on Friday shows the government has spent more than $ 6 trillion so far this year, a monumental jump of more than $ 4.4 trillion it has spent throughout 2019. This increase is largely due to emergency efforts aid to combat the COVID-1
Revenues, meanwhile, remained largely unchanged, but could only account for about half of the costs, leaving the finance ministry to borrow the rest.
The CBO estimates that the accumulating debt will exceed the size of the entire economy next year and will break its World War II record in the coming years.
Budget observers warn that excessive debt can weigh on economic growth, raise interest rates and make it harder for governments to spend on their priorities as interest payments increase over time.
But they also say that debt is a secondary issue during an economic crisis, when the focus must be on reviving the economy.