US Fiscal Deficit Hits Record High in First Half of Year... $1.7 Trillion

Source: WSJ

[Asia Economy Reporter Yujin Cho] The U.S. federal budget deficit for the first half of fiscal year 2021, which ended last March, has surged to a record high due to increased COVID-19 spending.

On the 12th (local time), the U.S. Treasury Department announced that the federal budget deficit for the first half of fiscal year 2021 (from last October to this March) reached $1.7 trillion, more than double compared to the same period last year.

This surpasses the previous record of $829 billion in the first half of 2011, marking the highest deficit ever recorded.

Monthly, the budget deficit for March alone was $660 billion, a 454% increase compared to the same month last year. During this period, government revenue increased by 13% to $268 billion, but government spending rose by 161% to $927 billion due to expanded COVID-19 expenditures.

The main cause of the expanding budget deficit is the rapid increase in government spending amid the economic slowdown caused by the COVID-19 pandemic, which led to reduced tax revenues.

The Wall Street Journal predicted, "The record budget deficit will be at the center of legislative debates over the $2.3 trillion infrastructure investment plan."

The Republican Party argues for the need to reduce the scale of the infrastructure investment bill, which the Democratic Party plans to fund through tax increases.

President Joe Biden said ahead of a meeting with Democratic and Republican lawmakers from both the House and Senate regarding the infrastructure investment plan, "I am ready to negotiate on how to finance the infrastructure investment plan."

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