The U.S. government budget deficit in March came in at $119 billion, according to the latest US Treasury Department Report. That’s a massive budget shortfall. But it’s actually the calm before the storm.
The March 2020 deficit came lower than the $146 billion shortfall in March 2019. But this was primarily a function of the calendar. Significant March outlays were pushed back into February. Overall, the budget deficit through the first half of fiscal 2020 stands at $744 billion, an 8 percent increase over FY2019.
Government receipts in March came in at $238 billion. That was a 3 percent increase over March 2019. Federal outlays totaled $356 billion. That was down about 5 percent year-on-year. But with calendar adjustments, the March deficit was $170 billion, compared to an adjusted deficit of $136 billion in March 2019. In other words, spending is way up overall in fiscal 2020.
And the real budget storm is on the horizon.
The March deficit does not reflect the revenue shortfalls and massive spending increases coming down the pike due to the coronavirus government shutdown and the stimulus plan passed by Congress. Lead U.S. economist at Oxford Economics Nancy Vanden Houten told MarketWatch she projects the 2020 deficit to come in well over $2 trillion.
With the economy in freefall depressing revenues and stimulus packages already in the pipeline, the deficit for the second half of fiscal 2020 is expected to be at least $1.5 trillion, bringing the deficit for the full fiscal year to around $2.2 trillion.”
The highest deficit on record was $1.413 trillion in 2009. In fact, the federal government has only run deficits over $1 trillion in four fiscal years, all during the Great Recession. The fifth trillion-dollar deficit was coming down the pike in fiscal 2020, despite what Trump kept calling “the greatest economy in the history of America.”
Simply put, the Trump administration was already running significant budget deficits even before the coronavirus crisis and debt was piling up at a dizzying pace. The deficit already featured numbers you would expect to see during a massive economic slowdown. Response to the pandemic has put spending and debt in hyperdrive. The national debt eclipsed $24 trillion earlier this month.
To put the growth of the national debt into perspective, the debt was at $19.95 trillion when President Trump took office in January 2017. It topped $22 trillion in February 2019. That represented a $2.06 trillion increase in the debt in just over two years. By November 2019, the debt had eclipsed $23 trillion. Now, less than six months later, we’re at $24 trillion, with much of the coronavirus stimulus still in the pipeline. That’s a $4 trillion increase in the debt since Trump took office.
The coronavirus pandemic has merely sped up the arrival of a storm that was already brewing.