The federal deficit for fiscal year 2021, spanning from October 2020 through the end of September 2021, was $2.8 trillion, the Congressional Budget Office announced on Friday.
The shortfall was $362 billion less than in fiscal year 2020 when the pandemic struck, which led to massive government aid spending. While spending rose by an estimated $265 billion in 2021, tax revenue rose by some $627 billion, or about 18%.
Federal spending skyrocketed under President Donald Trump, who signed massive federal stimulus programs into law during the height of the pandemic. That spending continued under President Joe Biden, who passed a $1.9 trillion relief package earlier this year.
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Spending in fiscal year 2021 was about $2.4 trillion more than in 2019, an increase of more than 50%. Spending in 2020 was on par with that figure. The budget deficit prior to the pandemic in fiscal year 2019 was less than $1 trillion.
“We must recognize that borrowing makes sense during emergencies, but this cannot become the new normal,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonprofit group that advocates for lower deficits. “Now that the economy appears to be recovering, we must stop borrowing, pay for any new priorities, and put in place a gradual plan to deal with all of this debt.”
The news comes along the backdrop of a congressional fight over the debt ceiling, which is the limit to how much borrowing authority the government has to pay its obligations.
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Republicans, expressing concern over a massive Democratic infrastructure and social spending package, had initially refused to vote to raise the limit. However, Congress is poised to approve a stopgap measure to extend federal borrowing authority until December, giving Democrats time to include a more extensive increase in their spending package.
