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US budget deficit hits all-time high of $864 billion in June

The federal government incurred the biggest monthly budget deficit in history in June as spending on programs to combat the coronavirus recession exploded while millions of job losses cut into tax revenues.

Posted: Jul 13, 2020 11:41 AM

WASHINGTON (AP) — The federal government incurred the biggest monthly budget deficit in history in June as spending on programs to combat the coronavirus recession exploded while millions of job losses cut into tax revenues.

The Treasury Department reported Monday that the deficit hit $864 billion last month, an amount of red ink that surpasses most annual deficits in the nation’s history and is above the previous monthly deficit record of $738 billion in April. That amount was also tied to the trillions of dollars Congress has provided to cushion the impact of the widespread shutdowns that occurred in an effort to limit the spread of the viral pandemic.

For the first nine months of this budget year, which began Oct. 1, the deficit totals $2.74 trillion, also a record for that period. That puts the country well on the way to hitting the $3.7 trillion deficit for the whole year that has been forecast by the Congressional Budget Office.

That total would surpass the previous annual record of $1.4 trillion set in 2009 when the government was spending heavily to lift the country out of the recession caused by the 2008 financial crisis.

The June deficit was driven higher by spending on various government relief programs such as an extra $600 per week in expanded unemployment benefits and a Paycheck Protection Program that provided support to businesses to keep workers on their payrolls.

The report showed that the cost of the Paycheck Protection Program in June was $511 billion. That reflected a charge to the government for all the bank loans made under the program even though the government will not actually have to pay out funds until the banks determine whether the businesses met the criteria for having the loans forgiven. Those requirements include spending at least 60% of the loan amount on worker pay with the other 40% going to overhead costs such as rent and utilities.

Another reason for the surge in the June deficit was the government’s decision to delay tax payments this year until July 15. That decision mean that quarterly payments made by individual taxpayers and corporations will not be due until July 15 this year rather than June.

So far this budget year, revenues total $2.26 trillion, down 13.4% from the same period last year, while spending totals $5 trillion, up 49.1% from a year ago.

The CBO estimate of a $3.7 trillion deficit for this year could go higher depending on the course of the economy. The country fell into a deep recession in February, ending a record long expansion of nearly 11 years. The Trump administration is predicting that the economy will come roaring back in second half of this year but many private forecasters are concerned that a resurgence of virus cases could make consumers too fearful to resume spending, which drives 70% of the economy.

Congress which has already approved more than $3 trillion in a series of rescue packages, is scheduled to debate another support effort when it returns from recess on June 20. Democrats are pushing for an extension of the expanded unemployment benefits which will soon run out.

California Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 879645

Reported Deaths: 16982
CountyConfirmedDeaths
Los Angeles2893666877
Riverside640751272
San Bernardino597791021
Orange570711410
San Diego52735853
Kern33448410
Fresno30051429
Sacramento24425468
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San Joaquin21187484
Contra Costa18157234
Stanislaus17341392
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Imperial12475335
San Francisco11901133
Monterey1109183
San Mateo10810157
Santa Barbara9608119
Merced9314152
Sonoma8934129
Kings815983
Solano711774
Marin7019124
Madera488673
San Luis Obispo400932
Placer397852
Yolo307356
Butte301950
Santa Cruz270623
Napa188214
Sutter179612
Shasta172329
San Benito140314
El Dorado12834
Yuba125310
Mendocino110321
Tehama7748
Lassen7571
Lake67015
Glenn6393
Nevada5828
Humboldt5549
Colusa5456
Calaveras33317
Amador31316
Tuolumne2494
Inyo21515
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Mono1752
Del Norte1731
Mariposa782
Plumas540
Modoc270
Trinity230
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