U.S. budget deficit climbed over $2 trillion in first eight months of fiscal 2021

The United States budget deficit reached a record high of $2.1 trillion, as spending continued to outstrip tax revenue during the first eight months of the fiscal year.

The Treasury Department reported Thursday that federal revenue for the eight months ending in May increased by 29 % to a record $2.6 trillion, owing mostly to stronger revenues from individual and corporate income taxes.

The government's red ink for the month was slightly under $132 billion, the lowest monthly deficit of the year but still enough to bring the entire deficit to around $2.1 trillion.

The month's tax collections were $463.7 billion, the highest number since July 2020. The total amount spent was $595.7 billion, the lowest level since February.

Outlays increased by 20% to a record $4.7 trillion, mostly due to payouts for unemployment benefits, feeding aid, and Covid-19 assistance programs. Revenue soared by 167% to $464 billion.

The federal government's debt has now reached $28.2 trillion. Taxpayers have paid $319.9 billion in interest on all of that debt in the current fiscal year, after paying $522.8 billion in 2020.

As consumer and corporate spending increases and businesses generate employment, federal revenue is expected to rise. Nonetheless, supply-chain issues and a labor shortage for lower-paying positions threaten to stifle expansion.

Congress has already appropriated more than $5 trillion in stimulus funds to assist the economy to withstand the Covid-19 outbreak. Legislators are also considering an infrastructure bill that was announced late last month, envisions a $1.84 trillion deficit in fiscal 2022, and predicts that public debt would exceed levels recorded during World War II.

However congressional Republicans have objected to some of President Joe Biden's spending proposals.

With four months left in the fiscal year, the government is on track to approach the record $3.13 trillion deficit set in 2020.

With inputs from WSJ