WASHINGTON — The federal budget deficit hit an all-time high of $3.1 trillion in the 2020 budget year because of COVID-19 spending approved by both political parties. The coronavirus pandemic shrank revenues and sent spending soaring.
The deficit for the budget year that ended on Sept. 30 was three times the size of last year’s deficit of $984 billion. It was $2 trillion higher than estimated in February, before the pandemic hit.
The previous record of $1.4 trillion was set in 2009 when the Obama administration was spending heavily to shore up the nation’s banking system and limit the economic damage from the 2008 financial crisis.
The 2020 deficit represented 15.2% of total gross domestic product, the sum of all the goods and services produced by the country. That was the highest level since 1945, when the U.S. was borrowing heavily to finance World War II.
Revenues fell by 1.2% to $3.42 trillion, while government spending surged 47.3% to $6.55 trillion. The spending reflects the relief programs passed in the spring to support the economy as millions of Americans were losing their jobs.
Many of the benefit programs expired in late July or early August, and so far Democrats and Republicans have been unable to agree on legislation to re-instate them. Republicans have balked at the level of spending sought by Democrats. Democrats believe that without significant support the country could be facing a double-dip recession. Republicans are urging Democrat governors to reduce lockdowns and protect the vulnerable.
About half of the 22 million jobs lost in March and April have been recovered.
President Donald Trump has said he is willing to compromise with Democrats on a new relief package but Senate Republicans have indicated they don’t support the spending levels being put forward by Democrats.
“The administration remains fully committed to supporting American workers, families and businesses and to ensuring that our robust rebound continues,” Treasury Secretary Steven Mnuchin said in a statement released with the budget report.
—AP stories contributed to this report.