U.S. Budget Deficit Eases As Economy Recovers
The US budget deficit is starting to ease from its pandemic highs as a recovering economy yields higher tax revenues and the effects of relief spending begin to slow, Treasury Department figures showed, Alan Rappeport reported for the New York Times.
Photo Insert: Despite the positive signs, complete U.S. economic recovery is still a work in progress.
For the 12 months through July, the budget deficit declined by 10 percent from a year earlier to $2.54 trillion. The modest decline from last year’s record high came as spending on unemployment benefits and health care have started to slow and as companies and individuals are paying more in taxes because employers are returning to work and spending is picking up.
For July, the federal government recorded a shortfall of $302 billion. That was the highest on record for the month, but revenue in July 2020 skewed higher because the usual April tax deadline was delayed last year.
Treasury Secretary Janet L. Yellen called on Congress this week to take action to address the debt limit. On Wednesday, Jen Psaki, the White House press secretary, urged lawmakers to follow the “historical precedent” and act on the debt limit on a bipartisan basis.
More spending is most likely in store. The Senate passed a bipartisan infrastructure bill this week that the Congressional Budget Office estimated would increase the deficit by $256 billion.
Democrats are now moving ahead with a $3.5 trillion budget plan that would tackle climate change and fund health care, child care, family leave, and public education expansion while increasing taxes on wealthy people and corporations.