The federal deficit in the first three months of the budget year is 60.7 percent higher than over the same time period as last year, a record-breaking $572.9 billion.
The deficit surged as a result of Congressional spending of $3.5 trillion in 2020 in response to the coronavirus, although critics note that spending on pork barrel programs that had nothing to do with the virus increased and also drove the deficit. At the same time, revenue declined because of ongoing state lockdowns.
The U.S. national debt has just reached 120.5% of the nation’s annual economic output, breaking a record set in 1946 for the highest debt level in the history of the United States. The previous extreme of 118.4% stemmed from World War II, the deadliest and most widespread conflict in world history.
Today’s unprecedented debt-to-economy ratio—which is economists’ primary measure of government debt—includes $2.5 trillion in new debt since the outset of the Covid-19 pandemic. However, it doesn’t account for the vast bulk of economic damage inflicted by government-mandated business shutdowns, which will soon make the debt ratio significantly larger by decreasing its denominator. Although this decline has already begun, most of it is not yet reflected in the official data on the size of the U.S. economy.
Federal Reserve Chair Jerome Powell warned Wednesday that the federal budget is on “an unsustainable path” due to rising levels of federal debt.