U.S. Posts Record $737.9 Billion Budget Deficit on Virus Relief

World News

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.

Read more: GOP Finds Deficit-Scold Voice Again, Adding Snag to Talks on Aid

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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