US budget deficit hits $2.54 trillion

US budget deficit hits $2.54 trillion

The United States budget deficit rose to $2.54 trillion for the first 10 months of the fiscal year 2021, the Treasury Department reported. Federal revenue for the 10-month period till July rose to $3.3 trillion, while total outlays rose to nearly $5.9 trillion, according to the Monthly Treasury Statement released late Wednesday.

The report came a day after the US Senate approved a $1.2 trillion infrastructure bill, with $550 billion in new federal spending for roads, bridges, drinking water, and other infrastructure projects.

The Congressional Budget Office estimated that the bill would add $256 billion to the federal budget deficit over 10 years, with just more than half of the new infrastructure spending to be offset by pay-fors.

Meanwhile, the Democrats are pushing a $3.5 trillion budget plan through Congress without Republican support, in an attempt to enact most of President Joe Biden’s social-spending agenda, which would boost investment in childcare, education, health care, and climate policy.

Democratic senator Joe Manchin, a moderate from West Virginia, said on Wednesday that he had “serious concerns” about his party’s big-budget plan, which could push the national debt to record highs.

According to a recent estimation by the Committee for a Responsible Federal Budget, a budget watchdog group, the two spending plans will, in reality, require nearly $1 trillion of direct borrowing and set the stage for roughly $2.9 trillion of total borrowing over the next decade.

This cost would lift debt to 115 per cent of gross domestic product — as opposed to 106 per cent — by 2031, the group noted.

“It is commendable that policymakers have called for fully offsetting new spending and tax breaks,” the group said.

“But rather than rely on gimmicks and a sleight of hand to achieve this, they should either scale back the proposals, identify the necessary tax increases and spending reductions to cover the full costs of their proposals or both.”

(Source : The Statesman)