For the first third of the 2021 fiscal year, the national deficit jumped to $736 billion as coronavirus spending took its toll on the federal government, the Treasury Department announced Wednesday.
The large sum is roughly 89% higher than the same four-month period in 2020, representing the time before COVID-19 reached the United States. January 2021 added roughly $163 billion to the deficit, the majority of which came from Social Security, health expenditures, and income security payments.
In the four months combined, the government spent roughly $435 billion on income security, $372 billion on Social Security, $258 billion on national defense, $256 billion on health-related expenses, and $228 billion on Medicare, in addition to a combined $375 billion on other outlays such as veterans’ affairs, transportation, and education. The expenses were partially offset by $579 billion in income taxes, $435 billion in social insurance and retirement, and $85 billion in corporate income taxes, among other sources of revenue.
The growing national deficit raised questions about President Biden’s $1.9 trillion COVID-19 relief proposal, which includes additional $1,400 stimulus checks and $350 billion for state and local government aid, among other provisions.
Biden’s nominee to lead the White House Office of Management and Budget, Neera Tanden, dismissed concerns about the ballooning deficits during a Tuesday confirmation hearing, arguing instead that the dominant concern must be economic restoration.
“The real challenge is, right now we can face the potential of significant scarring in this economy,” she said. “It is vital that we act.”
South Carolina Sen. Lindsey Graham, a member of the Senate Budget Committee who participated in Tanden’s confirmation hearing, acknowledged that Republicans have also racked up large deficits but argued that the bipartisan lavishness will have ramifications on the national debt.
“From a Republican point of view, we can’t really say a whole lot about running up the debt because we did it too,” he said, cautioning, “But there will be a day of reckoning.”
