The federal budget deficit grew a whopping 400% in one year as the pandemic caused spending to skyrocket, the Congressional Budget Office said in a report Tuesday.
The estimated January federal budget deficit was $165 billion, $132 billion more than the deficit in January 2020, according to a Congressional Budget Office (CBO) report released Tuesday. The federal budget in the first four months of fiscal year 2021, which started in October, was $738 billion, an 89% jump compared to the same period last year.
“That substantial difference is largely the result of the economic disruption caused by the 2020–2021 coronavirus pandemic and the federal government’s response to it,” the CBO report said.
In March 2020, as coronavirus spread rapidly across the country, the federal government passed the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act. Former President Donald Trump signed an additional $900 billion coronavirus stimulus bill in December.
President Joe Biden has promised to pass a massive $1.9 trillion stimulus package, which includes $2,000 direct payments to Americans and an additional $400 in unemployment pay per week. Biden’s Treasury Secretary Janet Yellen said during her confirmation hearing that the smartest thing to do for the economy is “act big.”
Biden’s plans he laid out during his campaign would increase federal spending by $11 trillion, according to a Manhattan Institute estimate.
The U.S. economy shrank 3.5% in 2020, according to a Jan. 28 Bureau of Economic Analysis report, the worst performance since the 1940s. The U.S. also recorded its sharpest rise in poverty since the 1960s when the poverty rate spiked to 11.8% in December.