In this Aug. 3, 2020, file photo dark clouds and heavy rain sweep over the U.S. Capitol in Washington. The U.S. government's budget deficit surged to an all-time high of $1.7 trillion for the first six months of this budget year, nearly double the previous record, as another round of economic-support checks added billions of dollars to spending last month. (AP Photo/J. Scott Applewhite, File)
By Martin Crutsinger
The U.S. government's budget deficit surged to an all-time high of $1.7 trillion for the first six months of this budget year, nearly double the previous record, as another round of economic-support checks added billions of dollars to spending last month.
In its monthly budget report, the Treasury Department said Monday that the deficit for the first half of the budget year — from October through March — was up from a shortfall of $743.5 billion in the same period a year ago.
The deficit has been driven higher by trillions of dollars in support Congress has passed in successive economic rescue packages since the pandemic struck in early March 2020. The latest round came in a $1.9 trillion measure that President Joe Biden pushed through Congress last month.
Biden's package included individual support payments of up to $1,400 and the administration rushed to make those payments as soon as the president signed the measure into law. The Treasury Department statement showed that the payments in March totaled $339 billion.
The budget report showed that the deficit for just March totaled $659.6 billion, the third-highest monthly deficit. For the six-month period, the $1.7 trillion deficit total surpassed the previous record of an $829 billion deficit run-up for the six months ending in March 2011. That was a period when the government was spending to deal with the economic damage from the recession caused by the 2008 financial crisis.
Last year's deficit, for the budget year that ended Sept. 30, totaled a record $3.1 trillion. The Congressional Budget Office estimated in February that this fiscal year's deficit would total $2.3 trillion. But that estimate did not include the cost of Biden's $1.9 trillion rescue plan that Congress passed in March or the impact of the administration's “Build Back Better” infrastructure proposal that Congress is considering now.
Nancy Vanden Houten, senior economist at Oxford Economics, said she expects the deficit for this budget year will total $3.3 trillion, an all-time high but up just 6.5% from last year's record shortfall of $3.1 trillion.
Analysts said the deficit's surge in the first six months of the fiscal year reflected that the first half of the 2020 budget year was mostly unaffected by the pandemic. The loss of revenue from millions of jobs lost and the big-spending measures Congress passed to deal with the pandemic-triggered recession occurred in the second half of the 2020 budget year.
Vanden Houten said that, while she expects Congress will pass some version of Biden's $2 trillion infrastructure bill, the budget impact will not occur until the start of the next fiscal year.
For the first six months of the current budget year, Treasury said revenues totaled $1.7 trillion, a drop of 5.5% from the same period last year. Spending was $3.4 trillion, up 45.3%.
Biden's rescue program passed without Republican support, unlike the previous packages passed during the Trump administration, which were backed by both Republican and Democratic lawmakers.
Republicans contend that new spending is not needed in light of rising deficits and increased signs that the economy is starting to rebound.
The Treasury report Monday showed that through the first six months of the current budget year, interest payments on the debt total $229 billion, $41 billion below the same period a year ago. That reflects lower interest rates on the rising level of debt.
A new analysis reveals that for more than two decades, the West has been the driest it has ever been since 800 A.D. The drought which began in 2000 has brought more devastating wildfires and draining water reserves well below healthy levels. Climate Scientists and Adjunct Associate Research Scientist at Lamont Doherty Earth Observatory at Columbia University,Benjamin Cook, joined Cheddar to discuss more.
Inflation remains hot as the January PPI has increased by 1 percent, twice what analysts had been expecting with a jump of 9.7 over the year. Beth Ann Bovino, the U.S. chief economist, for S&P Global Ratings, joined Cheddar News to discuss the rapid pace of inflation alongside higher wages, predicting the Federal Reserve will act quickly and forcefully this year. "They haven't changed their forecast, yet, that's gonna come out soon. But we expect that a March rate hike is basically pretty much baked in the cake," she said. "We think six rate hikes in total for 2022."
For black history month, Cheddar is highlighting black business leaders who are driving the need for representation forward. On February 10, the U.S. Chamber of Commerce hosted an event called 'Developing the Black-Owned Business Ecosystem.' The virtual event was organized under the lobbying group's two initiatives -- the Equality of Opportunity Initiative, and the Coalition to Back Black Businesses. The event highlighted the developments needed to develop more black-owned businesses in the U.S. Dr. Anthony Wilbon, Dean of the School of Business at Howard University, joined Cheddar News' Closing Bell to discuss his experience as a speaker at the event.
A newly declassified letter by senators Ron Wyden and Martin Heinrich claimed the CIA. has been conducting a Secret Surveillance Program which has been collecting a bulk of data from American citizens. The letter which was written in April of 2021 urges the CIA to come clean about the kind of data it collects and how many Americans have been impacted. According to these two senators, the program did not have the safeguards of congressional oversight.
Art Hogan, Chief Market Strategist at National Securities, joined Cheddar News' Closing Bell, where he says investors are taking a wait-and-see approach when it comes to the situation between Russia and the Ukraine and elaborates on the impact higher oil prices stemming from the conflict would have on the market.
Last week, Senators Ron Wyden of Oregon and Martin Heinrich of New Mexico, Democrats on the Senate Intelligence Committee, wrote a a letter airing concerns that the CIA is collecting the data of American citizens without their consent. The lawmakers fear that the program might be exploiting private data. Morgan Wright, the chief security advisor at cybersecurity firm SentinelOne, joined Cheddar News to discuss the ramifications of the letter. "We don't have all the dots in one place to connect them," said Wright, cautioning against jumping to conclusions.
Russian President Vladimir Putin and his Foreign Minister Sergey Lavrov said that diplomacy is still possible, while U.S. officials warn that an attack on Ukraine is imminent. Cheddar News speaks with James Astill, Washington bureau chief of The Economist on the latest developments in Eastern Europe.
As the number of Russian troops rose to 130,000 along its Ukrainian border, hopes for a diplomatic solution remain among world leaders. Jason McMann, head of geopolitical risk analysis at Morning Consult, joined Cheddar News to break down the fluid situation. "We saw signs pointing towards an increase in tensions between Ukraine and Russia, whereas today we're seeing some signs that the Russian government may be willing to continue down a path of diplomatic negotiations to try and find some sort of non-military solution," he said.
