The U.S. budget deficit jumped to a new record for March as the government sent out more than $330 billion in coronavirus relief payments to Americans.
The Treasury Department reported Monday that the deficit was $660 billion last month, 454% wider than March 2020, as revenue rose 13% to $268 billion, while spending increased 161% to $927 billion.
It was the third-highest monthly deficit total on record, after June and April of last year.
The shortfall for the first six months of fiscal 2021 soared to a record $1.706 trillion, compared with a $743 billion deficit for the comparable year-earlier period. The deficit hit a record $3.1 trillion in 2020.
“This is going to be a big deficit year because we were already running substantial deficits and passed a $1.9 trillion bill,” Marc Goldwein, a budget expert at the Committee for a Responsible Federal Budget, told the Washington Post. “This is not higher than expected. It’s what you’d expect with a $1.9 trillion stimulus on top of a structural deficit.”
As The Wall Street Journal reports, “The government’s spending surge has provided some cushion to the economy from the pandemic’s devastation, but it has also sent the federal debt soaring to levels not seen since the end of World War II as a proportion of the economy. Weaker corporate-tax revenue has contributed to the budget shortfall.”
Budget experts say higher-than-usual deficit totals are likely to continue for the rest of the year. Interest rates are relatively low, which has made it cheaper for the government to borrow money to fund the deficit.
The Congressional Budget Office projects the deficit for the fiscal year ending Sept. 30 will total $2.3 trillion, almost $1 trillion less than last year’s record gap but more than officials projected in September.
The 13% gain in March revenue reflected an increase in taxes withheld from individuals, representing strong earnings among higher-paid Americans who were able to work remotely, a Treasury official said, as well as from improved overall employment levels compared to a major drop in employment in the second half of March 2020.