U.S. Budget Deficit Hit $2.8 Trillion in Fiscal 2021
The deficit was not as high as projected as the strengthening economy gave tax revenues a boost.,
U.S. budget deficit hit $2.8 trillion in 2021, the second highest on record.
- Oct. 22, 2021, 12:22 p.m. ET
The federal budget deficit reached $2.8 trillion for 2021, the second highest total on record but an improvement from the prior year as an economy starting to recover from the coronavirus pandemic gave tax revenues a boost.
Official figures released on Friday showed that the budget shortfall in the 12 months that ended on Sept. 30 — the government’s fiscal year — was not as severe as the White House projected earlier this year. The Biden administration attributed the improvement to the $1.9 trillion relief package passed by Congress and the rollout of the vaccines, which has accelerated the reopening of the economy.
The budget deficit was down from the record $3.1 trillion that the United States recorded in fiscal year 2020, as the pandemic gripped the economy.
This year, tax revenues rose to $4 trillion, as wealthier individuals and corporations paid more in taxes than expected. Government outlays grew to $6.8 trillion, as relief payments, rental assistance money and funds for states and cities were distributed across the country.
The Biden administration is negotiating with lawmakers in Congress over about $2 trillion in additional spending on social and climate initiatives and debating how to pay for those programs.
Treasury Secretary Janet L. Yellen said in a statement on Friday that the budget numbers were proof that the economy was recovering and a sign that President Biden’s economic plans are working.
“While the nation’s economic recovery is stronger than those of other wealthy nations, it is still fragile,” Ms. Yellen said.