The federal deficit exceeded $1 trillion in the first five months of fiscal 2021, according to projections from the Congressional Budget Office released Monday.
The deficit through February spiked to $1.048 trillion, a $423 billion increase over the same period last year.
Spending this year is up 25 percent and revenues climbed 5 percent compared with the previous year.
The precipitous rise in the deficit is largely due to the COVID-19 pandemic and the federal response, which has unleashed trillions of dollars into an economy battered by health fears and social restrictions.
While many economists have been supportive of deficit spending during times of emergency, they nonetheless warn that there could be significant long-term consequences if the deficit is not brought under control once the recovery takes hold. It can be reduced through spending cuts, revenue increases, economic growth and reductions in borrowing costs.
In the 2020 fiscal year, which ended Sept. 30, the deficit hit a record $3 trillion, more than double the previous record. The deficit is projected to remain elevated before coming down later this year as the recovery strengthens.
The nonpartisan Congressional Budget Office (CBO) has projected this year’s deficit will fall to $2.3 trillion, but that forecast does not take into account the $1.9 trillion relief bill expected to be signed into law this week by President Biden. Still, not all of those funds will be spent during this fiscal year.
Many Republicans have recently raised concerns about the deficit. Congressional Republicans have universally opposed Biden’s relief bill, arguing the price tag was too high and that many elements did not focus on COVID-19 relief.
Republicans previously offered a $600 billion alternative, a dollar amount they said would be adequate to fill the gap following $4 trillion in relief measures passed last year on a bipartisan basis.
The CBO projects that deficits are on track to remain high throughout the decade, and that debt is expected to continue rising, surpassing its World War II record within 10 years.