US deficit has reached $2.7 trillion in the past year, CBO estimates

The nation’s deficit has reached $2.7 trillion in 11 months of the current fiscal year, according to an estimation from the Congressional Budget Office (CBO) released Thursday. 

The nonpartisan agency estimated in a report the figure was $295 billion less than the federal budget deficit recorded during the same period in the previous fiscal year. The agency also estimated outlays increased by 4 percent, or $245 billion, while revenues jumped 18 percent in the same period, or $539 billion.

The CBO credited a bulk of the increase spending to policies implemented in response to the ongoing pandemic, including refundable tax credits, as well as the CARES Act approved under former President Trump and subsequent American Rescue Plan, approved this year by President Biden. 

The agency also attributed the spending increase to a rise in outlays from the Supplemental Nutrition Assistance Program (SNAP) and the Disaster Relief Fund.

At the same time, however, the economy has also shown to have strengthened during the 11-month span, with receipts estimated to have reached $3.58 trillion, the agency said in its report. 

The CBO estimated individual income and payroll taxes saw a 14 percent increase during the time frame, or $376 billion. Corporate income taxes were also projected to have risen 77 percent, or by $125 billion. 

In July, the CBO projected the country’s deficit to reach $3 trillion this year, with an estimated $1 trillion being tacked on every year for the next decade. While less than the prior year’s numbers, the figure is three times higher than the budget shortfall of 2019, the CBO said.  

However, since that report, the CBO said on Thursday that, while outlays have remained consistent with the agency’s projections, income tax receipts have exceeded its predictions. 

“As a result, it seems likely that the 2021 deficit will be smaller than CBO projected in July,” the CBO projected in its recent report.