The U.S. federal budget deficit more than doubled to a record in the first half of the fiscal year amid a fresh wave of stimulus payments to cushion Americans from the persistent coronavirus pandemic.
The deficit last month was $659.6 billion, the third-largest on record and biggest since last June, swelling the total from October to March to $1.71 trillion, according to a Treasury Department report Monday.
The six-month total compares with $743.5 billion in the prior-year period. In March 2020, the deficit was $119 billion, which didn’t reflect the first wave of payments in the Cares Act approved late that month.
The March 2021 outlays included $339 billion in the direct pandemic-relief payments -- of up to $1,400 per person -- authorized under the $1.9 trillion American Rescue Plan bill passed last month. With additional payments in train, that law will widen the fiscal gap by more than $1 trillion this year and over half a trillion in fiscal 2022, according to the Congressional Budget Office.
While fiscal hawks worry that the deficit-fueled spending will boost inflation and make the U.S. less desirable for investors, sentiment in Washington has shifted, with diminished worries relative to decades past. Interest rates have remained low globally for decades, offering more room for government spending.
Even so, in a nod to long-term deficit worries, the president’s proposed $2.25 trillion infrastructure-and-jobs package includes a hike in the corporate-tax rate, and a planned wave of new social spending is likely to include higher levies on wealthy individuals.
Total spending in the first half of the fiscal year was $3.41 trillion, double the level of revenue. A year ago, spending over six months reached $2.35 trillion against receipts of $1.6 trillion.
For March, outlays totaled $927.2 billion, up from $355.8 billion a year earlier. Revenue rose less dramatically, to $267.6 billion from $236.8 billion.
