Coronavirus

Budget Deficit Now Expected To Near $4 Trillion This Year

And more coronavirus stimulus spending could send that number soaring higher.

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In the halcyon days of yore—you know, 10 weeks ago—budget hawks were fretting about the return of trillion-dollar deficits, with the Congressional Budget Office's latest 10-year projection showing that the annual budget deficit would hit $1.7 trillion by 2030.

Today, that projection is not even worth the paper it is printed on.

In the midst of the COVID-19 pandemic that has already prompted Congress to hike spending by $2.2 trillion (with more likely on the way), and with revenue collections likely to drop in a big way as a result of the coronavirus-induced economic shutdown, the federal government is facing the prospect of a budget deficit of nearly $4 trillion this year. That's according to several independent projections made by various organizations over the past week.

The numbers are truly staggering. According to the Committee for a Responsible Federal Budget (CRFB), a nonpartisan group that advocates for lower deficits, the budget deficit will hit $3.8 trillion this year—that's four times larger than the $984 billion deficit recorded last year. The exploding deficit will cause the national debt to exceed the size of the entire U.S. economy this year, something that has not happened since the height of World War II.

And it is almost certainly a best-case scenario. "These projections almost certainly underestimate deficits, since they assume no further legislation is enacted to address the crisis and that policymakers stick to current law when it comes to other tax and spending policies," the CRFB said in a statement. "The projections also assume the economy experiences a strong recovery in 2021 and fully returns to its pre-crisis trajectory by 2025."

If that happens, annual budget deficits will fall to about $2 trillion next year and to $1.3 trillion in 2025. For comparison's sake, the largest since-year deficit during the Great Recession that followed the 2008 economic crisis was $1.3 trillion.

But even if deficits recede to merely pre-coronavirus record highs, the national debt will continue to exceed the size of the U.S. economy for the immediate future, the CRFB projects.

Other budget-watchers have come to similar conclusions. Investment bank Goldman Sachs is now expecting a $3.6 trillion federal deficit this year. G. William Hoagland, a senior vice president of the Bipartisan Policy Center and a former Senate GOP budget aide, told Roll Call that he expects a deficit of $3.9 trillion. Romina Boccia, research director for the Heritage Foundation's Center for the Federal Budget, told Fox News that the deficit will likely exceed $3.5 trillion.

"There's the real risk, of course, that we might be teeing up a public debt crisis on the other end of this," Boccia told Fox. That, she added, would likely mean higher taxes, reduced government services, inflation, and economic stagnation.

Just as the heavy borrowing that took place during the Great Depression and World War II was followed by a period of fiscal restraint to bring deficits back in line, the CRFB says, so too must policy makers prioritize deficit reduction once the current public health crisis has passed. "Putting long-term deficit reduction measures in place sooner rather than later would allow policymakers to phase in changes more gradually and give those affected more warning and ability to prepare," the CRFB advises.

The CBO has yet to publish an updated projection that takes last month's passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act into account. By the time it does, that projection might be out of date, too. Already, President Donald Trump and Speaker of the House Nancy Pelosi (D–Calif.) are discussing plans for another trillion-dollar (maybe $2 trillion) stimulus package.

And the coronavirus is expected to wreak havoc on state budgets as well, raising the prospect that the federal government may have to use its credit card to bail out some states too. The National Governors Association is already asking for $500 billion.

In other words, 10 weeks from now, we might be wishing for the days when the federal deficit was only $4 trillion.

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    1. MOST L*BERTARIAN PRESIDENT EVAH!

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      2. This is the fault of the House of Representatives. Any time Team GOP runs up the deficit or starts a war there’s always some fellow traveller Democrat to blame.

        1. Where does spending originate?

          1. your mom

          2. Who sign off on it?

  1. No worries. Just lay the constitution beside the list of cabinet departments, and stop spending any money where you cannot draw a connecting line.
    Education
    Labor
    Commerce (maybe; you have to squint)
    Agriculture
    HHS
    HUD
    Energy
    Transportation (OK, we can keep the post roads)
    Homeland security
    Bingo, problem solved.

    1. Getta load of this sap, thinking we have a government of enumerated powers.

    2. Energy Department is War Powers — all the nuclear weapons come under the Energy Dept, not the DoD — I don’t know why.

      That’s the majority of what the Energy Dept does.

      1. all the nuclear weapons come under the Energy Dept, not the DoD — I don’t know why.

        If I were to guess, and it’s just that – a guess, it would be that back during WW2 The Manhattan Project was under the DOE. Maybe they figured if it was a line item in the DOE budget maybe they could more plausibly claim that they were merely researching nuclear energy instead of bombs? I don’t know, like I said, that’s just a guess.

        1. If I were to guess, and it’s just that – a guess, it would be that back during WW2 The Manhattan Project was under the DOE.

          The DOE did not exist until 1977 and The Manhattan Project was under Leslie Groves and the U.S. Army Corps of Engineers.

      2. Nuclear weapons are designed and made by the Department of Energy. The actual weapons are under Department of Defense control.

    3. You’re delusional. There is no more such thing as reducing spending inside either DeRp party. There never was even though you R’s have managed to blow smoke up America’s butt that you ‘have a plan’. Nor is there any connection now between spending and taxes. Generational war has been declared – using the dollar as the means of coercion – and as long as the younger generation goes along with that shit, they will become utterly enslaved to the generation in power making those decisions – and after they die to those who hold the debt payments that are being ramped up to ‘fund’ it.

      Unfortunately that next generation is either heading down the dead end of the current iterations of cryptocurrency (bitcoin and ethereum) – or has already been coopted via the ad-based smartphone addiction.

    4. Education
      Labor
      Commerce (maybe; you have to squint)
      Agriculture
      HHS
      HUD
      Energy
      Transportation (OK, we can keep the post roads)
      Homeland security

      Good so far!

      DEA
      FDA
      Domestic snooping under NSA
      More? Probably, but DEA and FDA are big ones…

      1. Right but you eat shit Hihn.

        1. Thank You SOOOOOOOOOOOOOOO much, uber-troll! We were ALL breathlessly awaiting YOUR OPINION, oh ye whose ego is bigger than that of Der TrumpfenFuhrer!

    5. Congrats, if you zeroed out all of those things you’d have eliminated… less than 16% of federal outlays. I’m not exactly sure what the actual percentage is but that’s less than 16%, probably way less since the stuff I’m looking at here doesn’t include Death Plague 2K19 stimulus. But we’ll just assume that you mean do that during a “””normal””” year.

      You cannot just trim the fat around the edges of federal spending. There isn’t enough waste, fraud, or abuse going on to cover 10% of the deficit. Mind you, there is a lot of waste, fraud, and abuse, but it’s insignificant compared to the above board 100% totally legit and approved spending. 75% of the spending made of three things: Social Security, Medicare, and interest on the debt. If you want to tackle the federal deficit then those must be the beginning, the middle, and the end of what you tackle. Everything else is just empty posturing.

  2. I’m ready for that $1000 a month now. It’s beer money until the reckoning.

  3. I heard a TED Talks where a guy said we could fix the economy and embiggen the prosperity of every 3rd world country by printing money and giving it to them.

    1. Sounds legit.

    2. Was it AOC in disguise?

  4. What if all this spending doesn’t result in massive inflation? What will we say to the modern monetary theorists then?

    I say “fuck off” but they don’t listen.

    1. Hyperinflation here we come….

    2. It won’t result in massive inflation. It will result in a debt-deflation.

      The debt that is created to fund this spending has TWO components – money up front that will be wasted because there is nothing productive to spend it on – and a debt repayment schedule that will strangle the next generations exactly like Japan. Until the future debt is either a)repaid (it can’t be) or b)written off in a ‘jubilee’ or c)repudiated (aka hyperinflation).

      Austrian school economics is utter bullshit that has no connection whatsoever with reality.

      1. The idea of future generations owning debt doesn’t make any sense to me. A thought experiment – Suppose no immigration and only one person, Mae Li, is born next year and no more people after that. Are you saying that she owns all the debt? I think all that is really happening is that the government is printing money. That’s it, there is no more than that. Thoughts?

        1. Mae Li doesn’t own it all in year one. But yeah – as people die, she will ‘inherit’ their debt service obligation. That obligation does not diminish because someone died. It merely transfers to the remaining living. Which over time means generational transfer.

          And that debt transfer can make a big difference. A significant portion of the increase in government spending and an economic squeeze in the late-1970’s and early 1980’s was the rollover of 30-year debt from the Korean War and 10 year debt from Vietnam. Bonds that had previously been paying 2-3% interest were rolled over to pay 10-15% interest. The people who paid that increased interest cost and had to make decisions about increased taxes or reduced spending were those alive at the time of rollover – not those alive at the time the debt was incurred.

  5. Obviously we need to raise taxes by $4 trillion.

    1. Just tax the billionaires, they must have a spare trillion or 2 lying around their not using.

      1. I have it on good authority that they just keep all that money in huge Scrooge McDuckian vaults so that they can go swimming around in it anyway.

      1. No reason to let Gates off the hook – – – –

    2. We already have. Increasing the money supply is just a deferred tax. The cool thing about it is that the banks who get to spend this money first don’t feel the effects, but everyone else will, so it is the most regressive form of taxation.

  6. One thing to account for coronavirus, another entirely to account for raising the deficit from 450 billion from Obama to over a trillion with Trump and for absolutely nothing.

    Way to go “fiscal conservatives.”

    1. Obama’s deficit averaged $1.15 trillion

      1. The day Obama took office for his first term, the projected deficit was 1.3 trillion. The yearly deficit then dropped steadily throughout his time in office to below 500 billion. When Trump took office, he immediately pushed the deficit back up to trillion dollar levels.

        I think that’s the point wearingit was making, Nardz. Why not try and respond to it?

        1. Obama spent a shitload of other people’s money. So does the current Trump administration. There are no fiscal conservatives anywhere to be found.

          1. Well except for a handful you are correct. Sad that the Republicans fought so hard for the sequester just to piss that away for Trump. They should have told him that was a no go from the start.

          2. StackOfCoins : “There are no fiscal conservatives anywhere to be found”

            And yet there is a discernible difference between presidents who take the deficit situation they inherit and make it much better, such as :

            (1) Bill Clinton
            (2) Barack Obama

            And those who take the deficit situation they inherit and make it much, much worse – such as :

            (1) Ronald Reagan
            (2) George HW Bush
            (3) George W Bush
            (4) Donald Trump

            I would think someone keen on the issue of government red ink might note that distinction, and vote accordingly. Of course if he typically votes FOR the fiscally-irresponsibility party – but still wants to talk a good game about deficits – there’s an easy way out : He just has to say they’re all equally bad (facts be damned) and he can continue to talk, talk, talk, talk……..

            1. It might be more instructive to look at which party controlled congress since they’re the ones that actually have the power of the purse.

            2. So your saying we need Republicans in the House?

              1. What is needed is for a Democratic President and one house of Congress to be Republican. Republicans are only concerned about debt when a Democrat is President.

      2. Obama’s deficits had been decreasing and was well below $1T his last year.

        1. Thank you R congress.

          Oh wait, the President has the power of the purse, right shit eater?

        2. Obama averaged $1.15 trillion across 8 years

          1. Nope. What can’t Right-types do the simplest math? In Trillions :

            2009 : 1.413 (Thanks W!)
            2010 : 1.294
            2011 : 1.300
            2012 : 1.087
            2013 : 0.680
            2014 : 0.485
            2015 : 0.438
            2016 : 0.590

            I get .911 – but you’re welcome to punch’t out on your calculator to double-check me. So : go back to whoever supplied your factoid and tell him you’re tired of being treated like a dupe.

            (Imagine if every Trump supporter did that! There wouldn’t be any left…)

            1. The debt increased $9trillion during Obama’s reign.
              9/8=1.15

    2. Way to go “fiscal conservatives.”

      What fiscal conservatives are you referring to? I sure as hell don’t see many in Congress, and there’s certainly not one in the white house, and not for a very long time. There’s certainly not enough to actually matter.

      1. He’s stupidly referencing something that hasn’t even pretended to exist for 2 decades. He might as well be thanking the Whigs.

  7. Couple of Points :

    (1) Remember: Trump’s budget-busting tax cuts added trillions more in raw debt and pushed the yearly deficit back up to levels seen at the height of the Great Recession. When they were passed, fiscally responsible people noted the folly of massive tax cuts / deficits in the middle of a strong economy. What happens during the next recession or national emergency when you already run plus-trillion dollar deficits in good times?

    Of course the fiscally irresponsible people (ie: today’s Right, “Conservatives”, Republicans) responded with their usual blather about purple-unicorn pixie-dust supply-side “magic” tax cuts that pay for themselves – but everyone whose mental acuity surpasses that of a two year old knows that’s lying bullshit. So here we are….

    (2) Today’s news, hot off the press : In the Coronavirus Relief Bill, the GOP pulled off some choice whoring for their base, in the form of goodies for businesses formed as “pass-through” entities. The effects of this mischief :

    “More than 80 percent of the benefits of a tax change tucked into the coronavirus relief package Congress passed last month will go to those who earn more than $1 million annually, according to a report by a nonpartisan congressional body expected to be released Tuesday. The provision … will cost taxpayers about $90 billion in 2020 alone, part of a set of tax changes that will add close to $170 billion to the national deficit over the next 10 years, according to the Joint Committee on Taxation (JCT), the nonpartisan congressional body.

    ….An analysis by the JCT found suspending the limit overwhelmingly benefits higher earners. About 82 percent of the benefits of the policy go to about 43,000 taxpayers who earn more than $1 million annually. Less than 3 percent of the benefits go to Americans earning less than $100,000 a year, the analysis found….Hedge-fund investors and owners of real estate businesses are “far and away” the two prime beneficiaries of the change, said Steve Rosenthal, a tax expert at the Tax Policy Center, a nonpartisan think tank.”

    1. The road to prosperity is paved with taxes!

      1. I give you today’s Right, folks :

        Economically illiterate and can’t get the same answer twice when adding 2+2, but damn sure quick with a pithy slogan…..

        1. So you’re saying his answer competely refuted everything you shit on the page.

    2. Thanks for the run down, grb. I’m sure all the cultists will be here in any moment to explain why deficit spending is libertarian.

      1. Doubt it, we’re all pretty tired of your inevitable whining about one party while fellating the other.

      2. You’ve posted this shitty comment a bunch of other times.

    3. Of course the fiscally irresponsible people (ie: today’s Right, “Conservatives”, Republicans) responded with their usual blather about purple-unicorn pixie-dust supply-side “magic” tax cuts that pay for themselves – but everyone whose mental acuity surpasses that of a two year old knows that’s lying bullshit. So here we are….

      Well, yes, conservatives are no fiscal conservatives, but compared to the Democrats and their free healthcare for everyone that does and end-zone dive across the border which was… what, estimated to cost $37 trillion or some such thing? I don’t know who to be particularly mad at.

    4. Tax revenue was the highest it’s ever been, post tax cuts

      1. That this happens just about every time seems lost on people.

      2. Yes, but not enough to cover the debts from the tax cut. So you are losing money.

        1. “Yes, but not enough to cover the debts from the tax cut. So you are losing money.”

          You are going to have to show your math here.

          The logic behind “tax cuts increase deficit” is that tax cuts = less tax revenue.
          Tax cuts do not increase spending.
          If tax revenues increase, there is no lost money from taxes.

          1. If this was a coloring-book-world, your “logic” would be flawless. But sorry; reality beckons; so put down your crayons.

            The real world economy and population are continually growing, meaning both higher revenue and higher costs. When people cut costs they are always cutting the growth rate of government – they never get near canceling-out the natural expansion of the U.S. economy.

            And when people cut taxes they are cutting the growth rate of revenue – they never get near canceling out the natural expansion of the U.S. economy.

            Ya see, Nardz, it’s like a massive supertanker on the high seas. You can throw its wheel over with some cuts – tax or spending – but raw momentum will keep that monster ship plowing ahead.

            When you cut the growth rate of revenue but leave spending’s growth rate untouched, increased debt ensues. Your “oh, taxes receipts still went up” silliness is just childish obfuscation. I expect even you realize that. Which is why supply-side promises always fail: Reagan, to W, to Brownback, to Trump.

            They. Always. Fail.

      3. Nardz : “Tax revenue was the highest it’s ever been, post tax cuts”

        Oh Lord have mercy; that dumb-ass garbage again! In the last eighty years tax revenue increased seventy-five times. And every one of those five outliers was a major economic shock to the system, such as the start of a major recession. Even then, revenue just resets lower and begins to climb again. Boasting that Trump’s budget-busting tax cuts didn’t overwhelm the natural expansion of the economy/population is liking bragging that water is wet. Sure you can do it, but expect people to look at you as if you’re an idiot.

        You see, the real question is how much did it increase. Because guess what : Just as the growth in revenue is virtually automatic with the expansion of the economy/population, so is the growth in costs. Outlays rise if the scope of government increases, decreases or stays exactly the same. Even if you gut the rise in tax revenue growth with Unicorn Fairy Magic Pixie Dust supply-side-bullshit, 2+2 still equals four. Cost rises more steeply than revenue; the deficit soars.

        Must be another Republican in the White House, eh?

        1. Your psychosis and resentment is a “you” problem, npc, not the rest of us

  8. Better start clapping our hands really hard or Tinkerbell will die.

  9. “There’s the real risk, of course, that we might be teeing up a public debt crisis on the other end of this,” Boccia told Fox.

    “However, like the risk of dying from the virus, it’s probably vanishingly small.”

  10. I’m with CMW… Most Libertarian President Evah! This is probably Obama’s fault!

    Ron

    1. Nice to see that eunuch’s leftist virtue signaling finally got him just a little bit of what he desires

  11. Don’t worry… the Team GOP butt suckers around here will come up with some Democrat to blame. Nancy Pelosi forced Dear Leader to sign it!

    1. Where does spending originate?

      1. And who sign off on it?

  12. Record deficits, record debt, record rates of the increase in both, and GDP growth below even that of Carter’s Malaise rates; Trump is Obama’s third term.

    1. Fuck off, hihn

  13. This enormous expenditure I fear will not have real oversight at any level, it is a misdirected give away and a lot of it will end up in the coffers of the DNC…On the bight side, China will most likely be forced into a world court to answer for their intentional negligence and WHO will get new leadership and over sighted funding in the future….Should the world court evidence prove that the source for virus contamination was indisputably from China and manufactured by the Chinese, the US and any country dealing with the PRC can cancel any debt China claims is owed, China can then go pound salt…..

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  15. What is NOT needed is elimination of agencies and Departments that keep our citizens safe and healthy and provide vital services. What IS needed is repeal of the 2017 tax legislation, and cutbacks in some bloated budgets–especially Defense.

  16. And then what? What happens? Look at all these big numbers. It’s so scary. What are we supposed to be scared of? What exactly is the problem?

    In the great plague of 1347, people believed the disease was spread by foul air they called a miasma. Some people decided to fight fire with fire and would stand around a latrine breathing in the fumes believing it would ward off the miasma.

    Just like those clueless people of 1347, our deficit hawks would have you believe that you can fight an economic recession with fiscal austerity. It’s suicide.

    Don’t fight MMT. It’s not a theory, it’s a fact. It’s happening in front of our eyes right now. Embrace it. There’s no shame in admitting you were wrong. Repeat after me: There is no shortage of federal money. The federal government does not have to balance its budget. Federal taxes do not fund federal spending. The national debt is just a pool of savings. Deficits can be a good thing.

    Understand that our problem is political, not financial. The federal government just needs to spend money wisely to improve our living conditions not bail out Wall Street bankers (>$20 trillion) or fight endless wars in foreign lands. Move away from the latrine.

  17. A trillion dollars here…and a trillion dollars there…and a trillion dollars..there…and pretty soon you’re talking about a lot of money. Or was it a billion? My things have changed!

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