Surging tax revenues as the U.S. economy rebounded from the coronavirus-driven downturn helped reduce the budget deficit for the fiscal year that ended Sept. 30, the Treasury Department and White House budget office announced Friday.
The fiscal 2021 deficit clocked in at a still-massive $2.8 trillion, although that’s down $360 billion from the previous year’s shortfall and it’s $897 billion less than the Biden administration predicted in February.
Before the COVID-19 pandemic, a $2.8 trillion deficit would have sent shock waves through Capitol Hill, where fiscal hawks had expressed alarm at trillion-dollar shortfalls. But the modest decline from a $3.1 trillion fiscal 2020 deficit reflects renewed optimism that the worst days of the pandemic are in the rearview mirror.
“Today’s joint budget statement is further evidence that America’s economy is in the midst of a recovery,” Treasury Secretary Janet L. Yellen said in a statement, calling the better-than-expected numbers “a direct result” of the administration’s COVID-19 management and a big aid package enacted in March.