The federal government’s deficit for fiscal 2020 was $3.1 trillion, the highest deficit on record, the Treasury reported Friday.
The previous record was set in 2009, during the Great Recession, when the deficit totaled $1.42 trillion.
The deficit for fiscal 2020, which ended on Sept. 30, was far higher than expected at the beginning of the year and much larger than the $984 billion deficit the year before.
The spike in red ink is due to the federal response to the coronavirus pandemic. Congress passed four major pieces of legislation that provided assistance to workers and families, small businesses, and state, local, and tribal governments.
Spending for the year was over $6 trillion, which was $2 trillion more than what was spent in 2019.
The federal government collected $3.4 trillion in fiscal 2020, which, given the historically high unemployment rate, was surprisingly only 1% lower than what was collected the year before.
Increases in excise tax collections and Federal Reserve earnings helped to offset the 7% decline in individual withholding and FICA taxes collected in 2020.
The record amount of spending increased the debt. The total federal debt held by the public increased by $4.2 trillion to $21 trillion, a level not seen in the country’s history.
Treasury’s deficit total matches what the Congressional Budget Office reported on Oct. 8.
The CBO report also projected that the federal response to the virus would significantly add to the federal debt in the years ahead. It projected that the debt would reach 104% of GDP in 2021 and rise to 107% in 2023, which would be the highest percentage in the nation’s history.
