The budget deficit of the United States hit $2.77 trillion
for 2021. The figure is the second-highest on record but has improved from the all-time
high of $3.13 trillion it hit in 2020. The deficits in both years are said to
be due to the trillions of dollars the government spent to arrest the
devastating effects of the ongoing COVID-19 pandemic.

According to the Joe Biden administration, the deficit for
the budget year that ended on September 30 was $360 billion lower than 2020, as
a recovering economy boosted revenues, helping to offset government spending
from pandemic relief efforts.

“Under President Biden’s leadership, the US economy is
getting back on track and Americans are getting back to work,” Treasury
Secretary Janet Yellen and Shalanda Young, acting director of the Office of
Management and Budget, said in a joint statement, according to the Associated
Press.

The biggest deficit that the US had seen before the current
pandemic had been a shortfall of $1.4 trillion in 2009 due to heavy spending to
counteract a severe recession following the 2008 financial crisis.

The 2021 deficit represents 12.4% of the US GDP, down from 15%
of GDP in 2020.

The 2020 deficit was the highest in relation to the overall
economy since World War II, when it hit 29.6% of GDP in 1943 as the United
States was borrowing heavily to finance the war effort. Those figures remained
elevated at 22.2% of GDP in 1944 and 21% of GDP in 1945 before beginning to
retreat once the war was won.

For 2021, the joint report from Treasury and the Office of
Management and Budget said government spending increased 4.1% to $6.82
trillion. This was offset by an increase of 18.3% in government revenues to $4
trillion. The revenue gain reflected an improving economy as millions of people
who had lost jobs at the start of the pandemic went back to work and corporate
profits rebounded after a horrendous 2020.

The non-partisan Congressional Budget Office expects the
deficit will fall to $1.15 trillion in the current budget year, which began
October 1, and will dip below $1 trillion for three years from 2023 through
2025 before rising again above $1 trillion for each year through 2031.

That CBO forecast does not include the spending that will
occur if Biden is able to get two pending measures through Congress: a $1
trillion proposal for traditional infrastructure projects such as roads and
bridges, and his plan to bolster social safety net and combat climate
change.

The safety-net measure had a price tag of $3.5 trillion but
is expected to be scaled back to around $2 trillion or less to meet the objections
of moderate Democrats, including Senator Joe Manchin of West Virginia.

(With AP inputs)