Dems set to borrow more money as deficit is set to shrink slightly

On Thursday, the nonpartisan Congressional Budget Office released updated forecasts that showed a $2.3 trillion deficit for the 2021 fiscal year, an amount lower than last year’s $3 trillion deficit but still the second highest since World War II. While that projection did not include Mr. Biden’s stimulus proposal, Democrats viewed the report as giving them room to borrow more money given that it projected a rosier longer-run economic picture than last fall.

The anticipated economic improvement flows from an economy that is recovering faster than officials previously expected, thanks to the ability of American businesses to adapt to the coronavirus pandemic and trillions in economic aid that lawmakers approved last year, including $900 billion in December. The budget office estimated that a quicker rebound from the depths of recession would bring in more tax revenues and increase the overall amount of goods and services churned out by the American economy, compared with its earlier forecasts.