The US budget deficit has set new negative results. The US federal budget is the largest in the world but the government seems to be unable to allocate funds proportionally. Therefore, now spending exceeds revenues. Recently, the US budget deficit has hit a record high of more than $3 trillion, driven by the government's massive spending on the coronavirus stimulus package.
Experts think that there is little hope that the situation will change for the better. In the next couple of decades, the US will not be able to stop the growth of the budget deficit. The gap between spending and revenue will continue to rise as the population ages and health care costs increase. According to Congressional Budget Office Director Phillip Swagel, the US authorities will have to raise taxes, cut spending, or take both measures at the same time. Currently, government spending is huge. However, economists are not surprised given the fact that the US authorities are struggling with the crisis and trying to prevent financial shock caused by the pandemic. It means they cannot use traditional tools to reduce the deficit.
Not long ago, the government allocated a record $3 trillion to revitalize the economy. US President Donald Trump also pledged with the consent of Congress to inject another $300 billion. This is quite generous taking into account the fact that in the second quarter of this year alone, the US GDP fell by 32.9% in annual terms for the first time since 1947.