The COVID-19 pandemic is placing a heavy strain on state budgets around the world. Whereas third-world countries unwillingly provide scant benefits amid shutdowns, advanced countries take responsibility for the health of their national economies and the well-being of their people. The US stands out as the leader in public spending. The US authorities have launched unprecedented stimulus programs to combat the virus-driven crisis, thus exposing the state budget to an enormous load.
According to the official estimates, the budget deficit zoomed over 100 times in June from a year ago. The Congressional Budget Office reported that the federal budget deficit soared to record $863 billion in June 2020 which is an incredible increase from June 2019 when a deficit equaled $8 billion. The June figure is nearly as much as the entire gap for fiscal year 2019 when the federal government ran a deficit of $984 billion. In fact, the authorities came up with the large-scale package of financial aid to shore up businesses and households amid the severe economic downturn. As a result, federal spending tripled while tax revenues tumbled over the first nine months of the current fiscal year which kicked off in September 2019. Thus, the total budget deficit for the first nine months of fiscal year 2020 now stands at $2.7 trillion which is $2 trillion up from the same period a year ago.
Meanwhile, the US public debt set a historic record in July, having topped $26 trillion. Nevertheless, analysts fear that such alarming budget deficits are harmful to the fiscal health of the US. Experts warn that the federal government will face an appalling deficit of $4 trillion in the whole 2020.