On The Money: US deficit hits $3 trillion amid pandemic | McConnell: Chance for relief deal ‘doesn’t look that good’ | House employees won’t have payroll taxes deferred
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THE BIG DEAL—US deficit officially hits $3 trillion amid pandemic: The federal budget deficit surpassed $3 trillion through August, according to official Treasury data released Friday, and is expected to hit $3.3 trillion when the fiscal year wraps up at the end of this month.
- The figures, which confirm earlier estimates from the Congressional Budget Office (CBO), show that the deficit is on track to be the largest in the country’s financial history.
- The $3.3 trillion figure is well over double the largest previous record of $1.4 trillion in 2009 amid the Great Recession.
- Revenues, in the meantime, remained largely unchanged but could only account for about half of the spending, leaving the Treasury to borrow the rest.
The Hill’s Niv Elis breaks down the data here.
The upshot: Budget watchers warn that excessive debt can weigh down economic growth, raise interest rates and make it harder for governments to spend on their priorities as interest payments increase over time. But they also say that the debt is a secondary concern at a time of economic crisis, when the focus should be on reviving the economy.
LEADING THE DAY
McConnell: Chance for coronavirus deal ‘doesn’t look that good right now’
Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnell’Top Chef’ star Tom Colicchio presses Congress to boost SNAP benefits during pandemic Overnight Health Care: McConnell: Chance for coronavirus deal ‘doesn’t look that good right now’ | Fauci disagrees with Trump that US rounding ‘final turn’ on pandemic | NIH director ‘disheartened’ by lack of masks at Trump rally On The Money: US deficit hits trillion amid pandemic | McConnell: Chance for relief deal ‘doesn’t look that good’ | House employees won’t have payroll taxes deferred MORE (R-Ky.) on Friday cast doubt on the ability for Congress to get a deal on a fifth coronavirus relief package after a failed vote in the Senate and a weeks-long stalemate between Democrats and the White House.
“We have been in a challenging period. … Regretfully, I can’t tell you today we’re going to get there. … I wish I could tell you we were going to get another package, but it doesn’t look that good right now,” McConnell said during an event in Kentucky.
- McConnell’s comments come after Democrats blocked a GOP coronavirus relief bill in the Senate on Thursday.
- After the setback several members of the Senate Republican caucus predicted that the chances for a deal on another coronavirus relief bill were all but dead until after the November election.
The Hill’s Jordain Carney brings us up to speed here.
House employees won’t have payroll taxes deferred
The House is not implementing President TrumpDonald John TrumpSenate panel seeks documents in probe of DHS whistleblower complaint Susan Collins: Trump ‘should have been straightforward’ on COVID-19 Longtime House parliamentarian to step down MORE‘s payroll-tax deferral for its employees, joining many private-sector employers in declining to participate.
“The Office of the Chief Administrative Officer, with the concurrence of the Committee on House Administration, has determined that implementing the deferral would not be in the best interests of the House or our employees,” House Chief Administrative Officer Philip Kiko said Friday in an email to House employees. “As a result, we will not implement the payroll tax deferral.”
The background: Trump signed a memo in August that directed the Treasury Department to allow employers to defer employee-side Social Security taxes, in an effort to provide relief to workers amid the coronavirus pandemic.
- Treasury and the IRS subsequently issued guidance under which employers can choose to defer Social Security taxes through the end of the year for workers making less than $4,000 biweekly.
- Employers would then need to collect the deferred taxes by increasing the amount withheld from workers’ paychecks in the first several months of next year.
The Hill’s Naomi Jagoda has more here.
GOOD TO KNOW