The anticipated federal deficit for this fiscal year is expected to be the second largest since the end of World War II, according to a new report issued by the nonpartisan Congressional Budget Office.
The new report estimates this year’s deficit at 10.3% of the country’s Gross Domestic Product. The only time that figure in the last 75 years was higher was last year, when it reached 14.9%.
Obviously, according to the CBO report, both last year and this year’s deficit is pegged to the Covid-19 outbreak and subsequent national economic shutdown.
But the report notes that that the latest deficit decline from 2020 to 2021 is evidence of that the pandemic is finally weakening.
Continues the CBO report: But even “after the spending associated with the pandemic declines in the near term,” it will go up again in the next decade due to such factors as rising interest rates and the growing debt.
An additional contributor to growing deficits, notes the report, is the increase in federal spending for Social Security and Medicare, due to the aging of the country’s population.
On the positive side, the CBO says that while revenues decreased primarily due to the pandemic economy, they are expected to generally increase for the rest of the decade.
By Garry Boulard
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