The Congressional Budget Office on Friday announced that the federal government would likely run up a $3.7 trillion deficit due to the effects of the coronavirus pandemic on the U.S. economy and massive spending for relief efforts.
The government will add over $2 trillion to the national debt in the remaining six months of the fiscal year, bringing total national debt to $26.6 trillion. The CBO also said the economy will probably contract by 12 percent in the second quarter.
“The economy will experience a sharp contraction in the second quarter of 2020 stemming from factors related to the pandemic, including the social distancing measures put in place to contain it,” the CBO report reads. “In the third quarter, economic activity is expected to increase, as concerns about the pandemic diminish…However, challenges in the economy and the labor market are expected to persist for some time. ”
The report referred to its findings as “preliminary projections, which are subject to enormous uncertainty.”
Due to widespread business closures, enacted by state governments to slow coronavirus spread, over 26 million Americans have filed for unemployment benefits since the start of the pandemic. Congress in late March passed a massive $2.2 trillion economic relief package for businesses and workers affected by the shutdowns, and on Friday President Trump approved an additional $484 billion in funding for small businesses and hospitals.
Senate Majority Leader Mitch McConnell (R., Ky.) signaled on Tuesday that Republicans would oppose further relief legislation until all Congress members have returned from recess.
“My view is: We just added another $500 billion to the national debt. Let’s see how things are working, McConnell said. “We need to weigh our obligations vs. [states and cities], since they have taxing authorities as well, and how to divide up the responsibility. So we’re not going to move on another bill related to this subject until we all get back here.”