U.S. Budget Deficit Hit $3.1 Trillion Amid Virus Spending Surge – The New York Times

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Federal agencies including the Treasury Department, the Small Business Administration, the Department of Agriculture and the Department of Health and Human Services saw their spending soar as they funneled loans to small businesses, subsidized farmers and provided funding for hospitals. Much of the money also went to households through stimulus checks and enhanced unemployment benefits that gave workers an extra $600 per week.

That spending was crucial to preventing families from falling into poverty and keeping businesses afloat. New research from the Federal Reserve released this week showed that Americans used one-time stimulus checks to save money and pay off debt.

Households spent just 29 percent of the money they received earlier this year, the Federal Reserve Bank of New York said in a post on its website, citing its Survey of Consumer Expectations, conducted in June and August. Another 36 percent of the cash was saved, while 35 percent was used to pay down debt.

Even the most ardent deficit hawks agreed that the virus, which shut down large swaths of the economy and tossed millions out of work, necessitated a huge fiscal response.

But with Election Day approaching, Republican lawmakers have shown little appetite for more spending, despite the fact that millions remain unemployed and previous aid has largely dried up. While the White House and Democrats want to bankroll another $1 trillion-plus aid package, Senate Republicans are preparing a $500 billion bill to vote on later this month. Speaker Nancy Pelosi and House Democrats support a $2.2 trillion package, while President Trump has endorsed going higher than the $1.8 trillion proposal the White House previously proposed.

On Thursday, he told Mr. Mnuchin, who is leading the negotiations, to make a bigger offer and said, “go big or go home.”

The Treasury secretary acknowledged this week that the deficit is a long-term concern but said now is not the time to worry about bringing it down. Given low interest rates and the severe nature of a health crisis that has stalled so many parts of the economy, he said the deficit was not an immediate priority.

Source Article from https://www.nytimes.com/2020/10/16/us/politics/federal-deficit-31-trillion.html

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