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The U.S. federal budget deficit grew to a record $2.1 trillion during the first eight months of the current fiscal year, the U.S. treasury reported.
Federal receipts leaped 29 percent to $2.6 trillion during the period, thanks to increased corporate and personal income tax receipts, reflecting a reviving economy and consumer spending reinvigorated by a successful vaccination campaign and vanishing restrictions on business and public gatherings.
Federal spending for the period rose 20 percent, year on year, to $4.7 trillion, also a record, as the government kept paying $300 weekly unemployment benefits to millions of jobless workers. Nutrition assistance, loans to small businesses, and $1,400 stimulus payments to most U.S. adults also dug the deficit deeper, the department noted.
TRENDPOST: The growing federal deficit increases the federal budget’s inflation risk.
The U.S. now spends about 9 percent of its budget paying interest on debt, U.S. treasury figures show. As interest rates rise, as they inevitably will, the country will have to devote more money to debt service and have less money to spend on programs and purchases.
Because politicians are as bad at cutting spending as they are at raising taxes to cover expenses, the U.S. government will continue borrowing more and more until a crisis demands drastic changes in borrowing and spending.