As the U.S. federal government battles the coronavirus epidemic, the federal deficit has been pushed above $3 trillion. Meanwhile, unemployment is also increasing ahead of the April 3 jobs report.
“It’s mind-boggling. I never contemplated this,” says Douglas Holtz-Eakin, president of the American Action Forum, who headed the Congressional Budget Office under President George W. Bush. “I can remember the quaint days when I was being yelled at because we had a $400 billion deficit and I was the CBO director. It doesn’t look so bad right now.”
Congress approved, and President Trump signed into law, an economic rescue package with $2 trillion in tax breaks and loan guarantees, helping airline industry, small businesses, hospitals, medical supply companies, and municipal governments.
“We are talking about massive amounts of money compared to anything we’ve ever done in this amount of time before,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
Dean Baker, co-founder of the Center for Economic and Policy Research, says the threat of a quick collapse of the economy, prompted by the surge in layoffs, should put deficit concerns to the side.
“The amount of employment in the economy is going through the floor,” he said. “And the deficit in that context … it’s almost a non sequitur. That’s not the sort of thing you should worry about.”