Deficit hits $572 billion in first quarter of fiscal year

The federal deficit in the first quarter of the 2021 fiscal year surpassed a half trillion, reaching $572 billion, according to an estimate by the Congressional Budget Office.

The deficit set a new record of $3.1 trillion in 2020, as the pandemic whacked the economy and the government rushed in with emergency spending to keep it from deflating. Spending was up 18 percent in the first quarter, while revenues dropped 1.1 percent.

The second largest deficit on record came in 2009, at $1.4 trillion, in the aftermath of the Great Recession, and was one of only four years to ever exceed the trillion-dollar mark until last year.

The Committee for a Responsible Federal Budget, a watchdog group, estimated that the deficit was on track to hit $2.3 trillion this year.

The final figure is likely to be significantly higher, as Congress is expected to pass further COVID-19 legislation, and possibly additional big-ticket spending on issues such as infrastructure.

President-elect Joe Biden is expected to unveil his proposal for such a package, with a price tag “in the trillions,” on Thursday.

Economists largely agree that deficit-financed spending is a good idea during an economic crisis, but their estimates of how much is necessary vary dramatically.

Many warn that the accumulated debt will have to be addressed once the economy recovers.