The U.S. federal budget deficit totaled $ 2.8 trillion in fiscal 2021, marking the second-highest budget deficit on record, but a slight improvement from the previous year as the economy recovers from the COVID-19 pandemic, the Treasury Department said on Friday.
The annual deficit was $ 360 billion lower than last year, which the Biden administration said reflected an “improvement in the economy due in part to the American Rescue Plan Act of 2021 (ARP ) and the deployment of COVID-19 vaccination “. The fiscal year ended on September 30.
âToday’s joint budget statement is further proof that the US economy is recovering,â Treasury Secretary Janet Yellen said in a statement.
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The deficit hit a record $ 3.1 trillion in fiscal 2021, as the COVID-19 pandemic virtually brought the economy to a halt and forced nationwide shutdowns. The previous record was a $ 1.4 trillion deficit following the 2008 financial crisis.
The government generated $ 4 trillion in tax revenue, more than $ 465 billion than expected. Officials said the increase was in part due to higher-than-expected collections of personal and corporate income taxes. Government revenues jumped 18.3%.
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The deficit figures were announced amid an ongoing debate on Capitol Hill over President Biden’s social spending bill, which is expected to cost around $ 2 trillion. President Biden and Democrats argue the plan is fully covered by proposed tax hikes on wealthy Americans, while Republicans say the plan will increase the federal deficit and fuel rising inflation.
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The Congressional Budget Office projects that the deficit will fall to $ 1.15 trillion for the current fiscal year and continue to decline over the next three years. These projections do not take into account the adoption of Biden’s proposed infrastructure and expense bills.