Because of vaccines and stimulus packages, the US budget deficit has fallen to $2.8 trillion this year | leadership

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The US federal budget deficit reached $2.8 trillion for 2021, the second-highest total recorded so far, but it is an improvement over the previous year as the start of the US economy’s recovery from the coronavirus pandemic boosted tax revenues.

Official figures released this week showed that the budget deficit in the 12 months that ended on September 30 – the government’s fiscal year – was not as severe as the White House expected earlier this year.

The Biden administration attributed the improvement to the $1.9 trillion congressional relief package and the start of vaccines, accelerating the restart of the economy.

Treasury Secretary Janet Yellen: “While the country’s economic recovery is stronger than that of other rich nations, it remains fragile.”

The budget deficit has fallen from the record $3.1 trillion that the United States set in fiscal 2020, as the pandemic grips the economy.

This year, tax revenue rose to $4 trillion, as wealthier individuals and companies paid more in taxes than expected.

Government expenditures also increased to $6.8 trillion, with relief payments, rental assistance funds, and funds earmarked for states and cities distributed across the country.

The annual budget deficit had previously peaked at around $1.4 trillion in the wake of the 2008 financial crisis.

The deficit was declining before rising in the first three years of the Trump administration, and then rising in the last year as the government pumped trillions of dollars to support the economy.

The Congressional Budget Office expects the deficit to fall in 2022 to $1.15 trillion, and to continue declining over the next few years before rising again later in the decade.

But those expectations depend on the spending policies that lawmakers will be able to enact.

The Biden administration is negotiating with congressional lawmakers about $2 trillion in additional spending on social and climate initiatives, and is debating how to cover the cost of those programs.

The Biden administration faces another deadline in early December to raise or suspend the legal limit on the federal government’s debt, and Republicans and Democrats are already preparing for another showdown over how to achieve that.

Republicans claim that raising the borrowing cap would be the fiscally responsible thing to do, while Democrats point out that doing so allows the government to pay the bills it has already incurred.

The Congressional Budget Office expects the deficit in 2022 to drop to $1.15 trillion and to continue declining over the next few years before rising again later in the decade.

“The budget numbers are evidence that the economy is recovering, and a sign that President Joe Biden’s economic plans are working,” Treasury Secretary Janet Yellen said in a statement last Friday.

“While the country’s economic recovery is stronger than that of other rich countries, it remains fragile,” Yellen added.

Yellen argued that because interest rates were so low, the United States could take on additional debt to make investments to build and repair infrastructure and protect the environment.

She said last Friday that doing so would improve the “long-term financial and economic health” of the United States.

© New York Times Foundation 2021
It was transferred to Al-Arabiya, “Al-Jazeera’s Leadership” page.

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