Federal Borrowing Amid Pandemic Puts U.S. Debt on Path to Exceed World War II

The aggressive federal response to the pandemic in March resulted in trillions of dollars in additional government spending, as Washington looked to provide tax breaks, assistance for small and large businesses, direct checks for low- and middle-income individuals and supplemental benefits for the unemployed.

Those measures were widely supported, as millions of workers were suddenly unemployed and businesses were forced to close their doors. Most economists have continued to call for additional spending, as the pandemic shows no sign of abating.

Loretta Mester, the president of the Federal Reserve Bank of Cleveland, who has warned about previous deficits, told reporters on Wednesday that her own forecasts for the economic recovery hinge in part on continued fiscal support, and that without it, the United States might struggle to make it through shutdowns and onto a sustained growth path.

While Ms. Mester said that she was “not one of those people who think that deficits don’t matter,” the United States cannot worry about loading up on debt in the middle of a nascent recovery.

“This isn’t the right time to have that conversation,” she said.

In a sign of how unconcerned investors are about the deficit, stocks rose on Wednesday, with the S&P 500 rising 1.5 percent to set another record. It was the index’s best day since July 6.

Republican lawmakers who were little troubled by the increase have since cited debt concerns as a reason to move slowly on a new package of economic assistance amid the pandemic. Democratic leaders in the House drafted and passed a $3 trillion opening bid for a new rescue package this week, but they pared it back and dropped some members’ top priorities from the bill out of deficit concerns.

Yet while Mr. Trump, as a candidate in 2016, famously pledged to pay off the entire national debt in eight years, he and his fellow speakers during this year’s Republican National Convention did not raise the deficit issue at all. Mr. Trump’s most recent budget proposal, offered before the pandemic spread rapidly in the United States, did not include a balanced budget even if he were to win re-election.

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