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US Deficit hits double the previous record -- $3.1 Trillion Options
Posted: Thursday, October 8, 2020 4:25:16 PM

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The federal deficit for 2020 is believed to have hit a record-smashing $3.1 trillion in 2020, well over double the highest deficit on record, according to an estimate by the Congressional Budget Office released Thursday.

Since Trump took office, the deficit has grown dramatically on the back of unfunded tax cuts and increased spending on both defense and domestic priorities.

"Relative to the size of the economy, the deficit—at an estimated 15.2 percent of gross domestic product (GDP)—was the largest since 1945, and 2020 was the fifth consecutive year in which the deficit increased as a percentage of GDP," the CBO report noted.

The Committee for a Responsible Federal Budget, a watchdog group, said the deficit had pushed the nation's debt burden to 102 percent of GDP, surpassing 100 percent of GDP for the first time since World War II.

"It is hard to believe we now owe a full year’s worth of output," the group's president, Maya MacGuineas, said.

"We weren’t supposed to cross this threshold for over a decade, but here we are. Debt is the size of the economy today, and soon it will be larger than any time in history," she added.

Most economists argue that high deficits are appropriate during periods of economic crisis to keep the economy afloat, and say they should be dealt with during times of economic growth. If left unchecked, the debt burden can slow economic growth, leave the nation unprepared to handle a crisis, and "crowd out" both private investment and government spending priorities.

One thing that has helped keep the country from spiralling into a massive economic depression is the fact that interest rates have been at or near zero, which means that borrowing money is cost effective. However, if/when interest rates eventually increase the debt payments will become unmanageable and the US economy will fail spectacularly.
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