CBO: Deficit through April hits $1.9 trillion

The federal budget deficit hit $1.9 trillion in the first seven months of the fiscal year, according to estimates released Monday by the Congressional Budget Office (CBO), larger than any full-year deficit before 2020.

That figure is $449 billion, or 23 percent, more than the same period last year, only two months of which were dramatically affected by the COVID-19 pandemic. The increase alone is similar in size to the entire deficit in the same period of the 2019 fiscal year, which came in at $531 billion.

The deficit rose $225 billion last month alone.

The role of government spending in the economy has taken center stage since President Biden was sworn into office. Republicans have argued that the scale of stimulus and government spending he has proposed are far greater than what the economy needs to recover from the coronavirus pandemic.

Biden pushed through the latest COVID-19 relief package, a $1.9 trillion behemoth, without Republican support.

He has also proposed $4 trillion in additional spending on infrastructure and family support programs that he says will serve as investments in the economy’s future prospects.

Biden is meeting with both Republicans and Democrats this week to hash out a possible compromise over the hard infrastructure portions of the package, which the GOP says should cost no more than $800 billion.

The precipitous rise in the 2021 deficit through April was due to government interventions to rescue the economy amid the pandemic.

“Most of the increases in 2021 arose from spending for refundable tax credits (particularly recovery rebates), unemployment compensation, and the Small Business Administration’s Paycheck Protection Program,” CBO noted in its report.

Revenues were up 16 percent, perhaps in part because last year, some employers were offered deferrals on paying some of their taxes in response to the pandemic.

Outlays, on the other hand, were up 22 percent, driven by stimulus checks, payments through Small Business Administration programs and additional unemployment benefits.