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.,

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U.S. budget deficit hit $2.8 trillion in 2021, the second highest on record.

Treasury Secretary Janet Yellen said that the budget numbers indicated that the economy was recovering.
Treasury Secretary Janet Yellen said that the budget numbers indicated that the economy was recovering.Credit…Pool photo by Greg Nash
  • 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.

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