The President of the United States Donald trump and Congress to approve unprecedented government spending in connection with the coronavirus. According to forecasts, the total will reach a record $ 5 trillion annual budget deficit, writes Fox News. Even considering inflation, no modern administration from Roosevelt to Obama have not seen such levels of spending and the budget deficit.
The US national debt is already more than 24 trillion dollars. In its current form, the budget deficit in 2020 is ready to beat the record one-year deficit, previously established under former President Obama, because the US government solves the problem of the impact of the pandemic coronavirus, paying historically large accounts in the form of Federal assistance to citizens trying to mitigate the effects of isolation for business and public life in General.
According to forecasts of The Wall Street Journal, after the adoption in late March, law of Federal assistance in the amount of $ 2.2 trillion, the Federal budget deficit in 2020 will reach $ 3.6 trillion. This is more than twice the budget deficit to $ 1.4 trillion, which the US had in 2009, the highest Federal budget deficit in US history in one year.
Partly it was inevitable for the President of the trump. Revenues will decline as the economy went into decline, and the total costs of assistance in connection with the coronavirus in the amount of 2.4 trillion dollars that trump has signed into law three separate bills — were widely seen as an essential part of the response of the Federal government to address the crisis in health care and the economy.
These costs may increase even more, as lawmakers and trump, it seems, are looking for much greater funding — the President wants to take another package at $ 2 trillion, mostly focused on infrastructure, and the Democrats are looking for a separate measure on $ 500 billion to help small businesses, hospitals and local authorities.
Overall, the total price could be around $ 5 trillion, if such measures are approved.
And yet trump, watching the bustling economy during the first three years of his presidency, used this time to reduce the Federal deficit and instead increased the rate of expenditures on the Federal deficit. In the last two years of the Obama administration in 2015 and 2016, the cumulative Federal budget deficit was slightly less than the 1.03 trillion dollars. According to the forecasts of the congressional Budget office, the Federal budget deficit had to be almost 1.02 trillion in 2020, before a pandemic coronavirus.
Because changes such as inflation, fluctuations in the economy and population growth make it difficult to compare public expenditure, debt and deficit over certain periods of time, as the public debt or deficit is usually calculated as a percentage of gross domestic product (GDP) is a measure of the size of the economy and thus ability to repay the debt that it carries.
The Federal budget deficit as a percentage of GDP in 2020 is likely to be the highest since the Second world war, with a deficit of $ 3.6 trillion, approximately 15 percent of U.S. GDP.
The Federal deficit was almost 27 percent of GDP in 1943, or more than $ 50 billion, when the US was in the middle of the Second world war under former President Franklin Delano Roosevelt, according to the Federal reserve of St. Louis. The deficit to GDP increased to 9.7 percent of GDP in 2009, when the Obama administration tried to pull the United States out of the great recession. The highest peak for the last period of time was when the deficit reached 5.7 percent of GDP in 1983 — during this period, the Reagan administration lowered taxes and increased military spending in an attempt to defeat the Soviet Union.
The deficit under Lyndon Johnson, whose program “the Great society” included Medicare and Medicaid, never exceeded 3 percent of GDP, mainly because expenditures were not the result of a crisis situation, such as the Second world war or the Great recession, and the high cost of these programmes was laid out for many years.
Current national debt — more than 24 trillion dollars — is more than 100 percent of GDP.
The administration of the trump in the first three years of increased military spending and lowered taxes — two priorities for the President, who have worked together and increased the deficit, though he did cuts elsewhere in the budget. Attitude to the deficit under his administration is not typical for a Republican President, especially after the Republicans at the beginning of the 2010s raised the noise due to the increase in government spending during the Obama administration.
The increase in the deficit in the trump contrary to the comments made in 2016 in an interview with the Washington Post.
“I think that I would be able to do it pretty quickly,” trump said in response to reporter’s question about the repayment of government debt at 19 trillion dollars.
When a newspaper reporter asked trump how much time it takes, trump replied: “Well, I would say, for eight years,” before explaining that, in his opinion, the revised commercial deals can help to eliminate the national debt.
Romina Boccia, President of the Center for the Federal budget Grover Hermann the conservative heritage Foundation, warned that quick charges in the government’s attempts to break out of the economic hole caused by a coronavirus, can lead to even greater consequences for the United States.
“Of course, there is a real risk that at the other end of this crisis, we could spur sovereign debt crisis,” said Boccia, which could lead to higher taxes, difficulties in the provision of public services, inflation, and economic stagnation.
Of course, the economic pain that the government is trying to facilitate real — more than 16 million people applied for unemployment benefits last week, which is an unexpected result. Legislators and the President is not just trying to soften the blow from the impact of the pandemic, but also to prevent wider economic collapse. Part of the allocated money that goes to loans, can also be returned.
Bocce urged lawmakers to more specifically target assistance programmes to companies and individuals that have actually lost money because of the problems associated with the coronavirus, and rewrite the extension of unemployment benefits, which some lawmakers condemned, because the proposed project could make more beneficial for some employees, leaving current jobs, rather than continuing to work.
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