The U.S. government’s sweeping fiscal effort to contain the economic damage from the coronavirus pandemic came to light Tuesday in its monthly budget statement, with a record $737.9 billion deficit in the month of April alone.
Two major government relief efforts pushed spending to almost $980 billion, more than 2 1/2 times what it was a year ago, the Treasury Department’s report showed Tuesday. Special payments to individuals and families totaled $217 billion, while Medicare payments, grants to states and local governments and unemployment compensation also contributed to the spending surge.
April is typically a surplus month for the Treasury as income tax payments come due. Last year during the month, the U.S. had a $160.3 billion surplus. This year, however, receipts fell nearly 55% compared with April 2019, to $241.9 billion. Payments to the government cratered as individual and corporate income taxes declined following the Trump Administration’s decision to push the tax-filing and payment deadline to July 15.
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The disastrous fallout on the labor market from business closures and stay-at-home orders also caused a sizable hit to amounts withheld from workers’ paychecks. The economy lost 20.5 million jobs in April and the unemployment rate soared to 14.7%, the highest since the Great Depression era of the 1930s.
In the first seven months of fiscal year 2020, the U.S. budget deficit was $1.48 trillion, compared with $530.9 billion at the same point last year. The Congressional Budget Office has estimated that the nation will have a shortfall of about $3.7 trillion this fiscal year and $2.1 trillion in 2021, assuming no major emergency funding is provided.
A deficit that size this year would bring federal debt held by the public to more than 100% of gross domestic product from about 80% at the end of last fiscal year. The shortfall would also be about 18% of GDP this year.
— With assistance by Saleha Mohsin, and Jenny Leonard
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