Monthly Federal Budget Deficit Nears $1 Trillion As Government Tries To Rescue Economy From Coronavirus Pandemic

The Treasury Department Monday blamed the coronavirus pandemic and the government response for a major jump in the budget deficit, which hit $2.7 trillion for the first nine months of the fiscal year. The deficit for June alone was $864 billion.

In the aftermath of the Great Recession, annual budget deficits exceeded $1 trillion for four years.

The Monthly Treasury Statement indicated the federal government collected just $241 billion in revenue but spent $1.1 trillion, nearly double what gets spent in a typical month, with nearly half going to efforts to support the economy.

By comparison, the deficit in June 2019 was $8 billion.

For the first nine months of fiscal 2020, the U.S. government has collected $2.26 trillion in revenue but spent more than $5 trillion. As of June 30, total U.S. debt stood at nearly $26.43 trillion, compared to $22 trillion on June 30, 2019.

Part of the gap is attributable to the delay in collecting 2019 income tax revenue. The Internal Revenue Service delayed the tax deadline from April 15 to this Wednesday.

The government spent $494 billion in emergency economic aid last month, $156 billion in direct payments to taxpayers, $97 billion on Social Security, $81 billion on education, $71 billion on health, $61 billion on Medicare, $58 billion on national defense, $19 billion in interest payments, $18 billion on veterans’ benefits and services, and $51 billion on miscellaneous items.

Congress has approved about $3 trillion in emergency spending since March to fight the economic effects of the coronavirus pandemic. Lawmakers are expected to approve at least $1 trillion more within the next two months. Senate Republicans put off further action last month, saying they wanted to assess the impact of the funds approved so far.

The U.S. economy entered recession in February, and experts have been urging the federal government to spend big to help it recover from the downturn. Some 20 million Americans currently are collecting unemployment benefits, the vast majority having lost their jobs because of shutdowns mandated by the pandemic.

“Big government deficits are the only thing keeping the U.S. economy on life support and anti-deficit rhetoric threatens to pull the plug,” Nathan Tankus, research director of the Modern Money Network, told the Washington Post.

Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, told the Post the government will have to get spending back under control once the economy has recovered.