Should The Rising Federal Deficit Be Considered In Pandemic Relief Talks?
RACHEL MARTIN, HOST:
As the pandemic drags on, millions of unemployed Americans are just stuck waiting without any help from Washington. Negotiations have been on and off for weeks. Now they're on again. House Speaker Nancy Pelosi says she and Treasury Secretary Steve Mnuchin have to reach a deal for another round of coronavirus relief within 48 hours if they want to make an agreement before the election. Republicans in the Senate will be considering their own package this week. It is stripped down from other proposals because they're reluctant to add trillions more to the skyrocketing federal deficit.
NPR's Scott Horsley has been keeping track of that deficit, and he is with us now. Good morning, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Rachel.
MARTIN: All right - so what are the options on the table right now for relief for those who are unemployed because of the pandemic?
HORSLEY: I'm afraid the table is pretty bare. Even if Pelosi and Mnuchin do produce a deal, it's not clear Republicans in the Senate would go along. Lawmakers were a lot more generous with the government's checkbook back in March, but much of that relief money is gone now. And, of course, the pandemic is still weighing on the economy. The latest weekly count from the Labor Department showed another 1.2 million people applying for unemployment benefits, so the job market is still tough. I talked with Al Benki (ph) - he's an unemployed marketing consultant and part-time musician in Austin, Texas. He told me back in, the spring and early summer, he was able to get by with the extra $600 a week in jobless benefits. But, of course, those ran out more than two months ago.
AL BENKI: It's been a bit of a roller coaster. And as tough as it was working in the service industry before all this hit, it's gotten tenfold harder to make ends meet.
HORSLEY: Job growth has declined in each of the last three months. And as colder weather comes this fall, we're seeing a fresh surge in infections.
MARTIN: Right. So, you know, I mentioned the concerns over the federal deficit at the top. We have fresh data about the deficit now, right? What does it tell us?
HORSLEY: The Treasury Department reported on Friday that the deficit for the just ended fiscal year was a whopping $3.1 trillion. That's more than twice the previous record. It's about three times what had been expected before the pandemic. Tax revenues were down - as you might expect with millions of people out of work - and government spending was way up, mostly because of COVID.
MARTIN: So we're way in the red. What's the big picture here?
HORSLEY: Fortunately, the government is still able to borrow money at very, very low interest rates. So even as eye-popping as a $3 trillion deficit is, most budget hawks say this is not the time for the federal government to turn off the spigot. Instead, they say the government should be doing everything it can during this, you know, once-a-century pandemic to keep businesses and families afloat. Here's the way Federal Reserve Chairman Jerome Powell put it to a group of business economists earlier this month.
(SOUNDBITE OF ARCHIVED RECORDING)
JEROME POWELL: The U.S. federal budget is on an unsustainable path, has been for some time. And I think that's something we will need to return to. This is not the time to give priority to those concerns. The time to do that is when the economy is strong, unemployment is low, people are working - they're paying taxes. That's the time to work on getting back on a sustainable path.
HORSLEY: It's not surprising, Rachel, the government would be running a big deficit during the deepest recession since the Great Depression. But keep in mind, even before this pandemic hit - when the economy was strong and when unemployment was low - the federal government was already running a $1 trillion deficit as a result of that GOP tax cut and increased spending on the military and domestic programs. So we were already swimming in a river of red ink - the coronavirus just added the waterfall.
MARTIN: NPR's Scott Horsley. Thank you, Scott.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.