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Body of the US Congress foresees deficit of 3 trillion dollars in fiscal year 2021

By David Lawder

WASHINGTON, Jul 1 (.) – The U.S. government budget deficit will drop slightly to about $ 3 trillion in fiscal 2021, despite higher aid spending from the coronavirus, the U.S. Budget Office said on Thursday. Congress (CBO), which mentioned a greater rebound in economic growth and tax revenues compared to previous forecasts.

The CBO, which is not affiliated with any party, said in its updated forecast that it expects gross domestic product growth to reach 7.4% in 2021, based on comparisons to the fourth quarter, decreasing to 3.1%. in 2022 and 1.1% in 2023.

The fiscal year 2020 budget deficit reached a record $ 3.129 trillion, due to coronavirus aid programs and the sharp decline in economic activity following the COVID-19 closures.

In February, the CBO had projected a deficit of $ 2.26 trillion for fiscal year 2021, ending September 30, but that figure did not take into account the impact of the $ 1.9 trillion pandemic aid package. dollars enacted by President Joe Biden in March.

The CBO said the law, known as the American Rescue Plan, added about $ 1.1 trillion to its deficit projections for fiscal year 2021.

The projections do not include Biden’s proposed investments in infrastructure, child care, education and other social programs, which could add trillions of dollars more to spending if not offset by increases in taxes or other revenue.

Nonetheless, the CBO said that a stronger-than-expected economic rebound, helped by robust consumer demand and the growing number of Americans getting vaccinated against COVID-19, was offsetting the impact of some of the bailout spending. in deficit.

“Projected revenues for the next decade are now higher due to the strength of the economy and the consequent increase in taxable income,” the agency said in a report containing its new forecasts.

The CBO’s estimate of the deficit for fiscal year 2021 is equivalent to about 13.4% of GDP, compared to 14.9% in fiscal year 2020. It projects that the deficit will fall sharply to $ 1.153 trillion, or 4.7% of the GDP, in fiscal 2022, and up to $ 789 billion, or 3.1%, in fiscal 2023.

(Edited in Spanish by Javier López de Lérida)

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