The Feds suffered the second-highest deficit ever in 2021: CBO
The Congressional Budget Office said Friday that Uncle Sam ended fiscal 2021 in the red, calculating that the government is running a deficit of $2.8 trillion, the second-worst on record.
The COVID-19 pandemic has opened up the government’s portfolio unlike anything since World War II, driving spending higher in 2021 than it had in 2020. But the economy has recovered enough to raise revenue, so the overall deficit has been better this year, according to for a CBO estimate.
Final numbers will come from the Treasury, likely later this month.
CBO’s Appreciation It comes as Congress debates a new round of spending in the Democrats’ $3.5 trillion change to the nation’s welfare policies. This will come on top of a historic spike in spending over the past 18 months.
Analysts said spending in 2021 was $2.4 trillion more than it was in 2019, the last full year before COVID-19. That covers everything from new tax credits to public school aid to $50 billion in additional food stamps and farm payments.
The Central Bank of Oman said rising inflation had also increased the cost of paying interest on the national debt.
However, the revenue side of the ledger was much brighter from a financial standpoint, with receipts up 18% in 2021 compared to 2020. The CBO says the government has raised more than $4 trillion over the past year.
“This change largely reflects the overall strength of the economy over the past year,” the CBO said.
Salary withholding rose by $244 billion, indicating higher wages and salaries in the workforce.
The Central Bank of Oman said corporate income taxes have risen 75% over the past year because profits have been higher.