Monthly U.S. Budget Deficit Soared to Record $864 Billion in June
The shortfall was nearly as large as the entire 2019 deficit as spending on virus-related efforts outpaced revenues.
Washington recorded a record monthly budget deficit in June as the government tried to combat the economic effects of the virus.Credit...Stefani Reynolds for The New York Times
By Alan Rappeport and Jim Tankersley
The budget deficit, which had already reached almost $1 trillion in 2019, ballooned to nearly $3 trillion in the first nine months of the 2020 fiscal year and is expected to keep growing. The federal government, which has been shoveling cash out the door to fund unemployment benefits, small-business loans and direct financial support to families, is on pace to borrow more money, as a share of the economy, than it has at any time since World War II.
The increases are the direct result of the economy’s swift collapse amid the pandemic and Congress’s efforts to weave a safety net to save people and businesses from financial ruin. Lawmakers have spent nearly $3 trillion thus far, and they could be poised to spend more by month’s end to prevent a sudden wave of layoffs, foreclosures and other rippling economic pain as temporary emergency support approved by Congress expires while the economy is still reeling from the virus.
Continue reading the main story
Real-time indicators suggest that an initial rebound from the trough of the recession, including job gains in May and June, has reversed in recent weeks, as the virus spread quickly across the South and Southwest.
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“We should not be taking our foot off the gas here,” said Senator Michael Bennet, Democrat of Colorado, who has introduced legislation that would automatically continue to supply aid to people and businesses until economic conditions improve. “We have to bridge the American people across the threshold, to a point where people feel more certain about public health.”
Conservative economists have in the past warned that excess borrowing risked slowing economic growth by pushing up borrowing costs for businesses and sending consumer prices soaring.
But many of those economists, including Michael R. Strain of the American Enterprise Institute and R. Glenn Hubbard of Columbia University, have said additional spending is needed in the face of the coronavirus. Economists who had been pushing lawmakers to wind down spending on generous unemployment benefits now say recent economic data suggests that larger deficits will be needed moving ahead — including spending on another round of direct payments to individuals, which could help families bridge the gap as the virus hampers business activity.
‘Stanley Kubrick,’ a Brisk New Biography of a Major Talent
This Is How It All Ends
‘Life of a Klansman’ Tells Ugly Truths About America, Past and Present
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“To the extent people can get on board with it,” said Karl Smith, vice president of federal policy at the conservative Tax Foundation in Washington, “another check would be good.”
President Trump, who promised to balance the budget within two terms, has shown little appetite for cutting spending and has yet to promote the “fiscal conservative” message that has defined the Republican Party for years.
Instead, Mr. Trump invested heavily in revamping the military and, with the support of only Republican lawmakers, pushed for a $1.5 trillion tax cut, which came nowhere close to producing the revenue to pay for itself, as the administration had promised.
Treasury Secretary Steven Mnuchin has also downplayed deficit worries, arguing that borrowing costs remain low and that the government must spend whatever is necessary to endure the economic disruption caused by the pandemic. He has said the deficit is a long-term concern that should be addressed by spending cuts and policies that spur economic growth.
The June deficit was driven largely by government spending on the Paycheck Protection Program, which by the end of the month had approved more than $500 billion in loans to support small businesses. A Treasury official noted that the loans approved through the program had yet to be forgiven, but because of government accounting rules they were required to be listed as an expenditure.
Over all, government outlays topped $1.1 trillion last month, while receipts were down sharply as a result of tax payments that have been deferred until mid-July. And the deficit recorded in June was higher than the entire budget gap for 2018.
The swelling deficit, while expected on the heels of big spending packages, could further complicate talks for another rescue effort given Republicans’ recent concerns about the financial tab. Lawmakers are preparing to resume negotiations over another round of fiscal support, which could become even more imperative as the virus surges in many parts of the United States.
Continue reading the main story
Yet some lawmakers have begun to publicly fret about the huge sums of money going out the door and have already rejected any attempt to extend more generous unemployment benefits, which are set to expire on July 31.
“We can’t borrow enough money to solve the problem indefinitely,” Senator Mitch McConnell of Kentucky, the majority leader, said in April.
The June deficit blew away the previous monthly record of $738 billion, which was set in April. The shortfall was nearly as large as the $984 billion that the U.S. accumulated for the entire year in 2019 and far larger than last June, when the budget deficit came in at a relatively paltry $8 billion.
For the fiscal year to date, the government is generating red ink at a record clip. So far in fiscal 2020, the deficit is $2.74 trillion, a 267 percent increase from the same period in 2019.
The figures underscore the deep fiscal hole facing the United States as it tries to counteract a pandemic that has thrown millions of people out of work and shuttered businesses across the country.
The Coronavirus Outbreak ›
Frequently Asked Questions
Updated August 6, 2020
In addition to small-business loans, the U.S. has sent more than $267 billion in direct payments to households as of early June. Additional funds have gone to help airlines, local governments and other entities.
House Democrats passed an additional $3 trillion relief package in May that would send money to struggling state and local governments and direct more stimulus payments to taxpayers. That bill was a nonstarter with most Republicans, who recoiled at its high cost and never brought it up for a vote in the Senate.
Continue reading the main story
Now, attention is turning to a plan that could win support from both parties, as well as the White House.
The next bill could cost $1 trillion to $3 trillion. Trump administration officials have been calling for a payroll tax cut, a capital-gains tax holiday, additional targeted relief to industries that have been hit hardest by the pandemic — such as travel and tourism — and another round of stimulus checks. Republicans have also been discussing liability protections for businesses, incentives for companies to rehire workers and additional aid for schools and medical care providers.
But in shying away from piling on more debt, some Republican lawmakers have pointed to monthly job reports indicating that the labor market could be recovering more quickly than some economists expected. The White House has said it wants to see the effects of the earlier stimulus legislation, which has not been fully deployed, before it adds to the tab.
Larry Kudlow, the director of President Trump’s National Economic Council, said on Monday that despite some recent layoff announcements, he was optimistic that the economy would rebound sharply later this year.
“In terms of a V-shaped recovery, if you look at a variety of indicators, including high-frequency indicators, it looks like it’s a story that’s still in place,” Mr. Kudlow said on Fox News.
Continue reading the main story
“If we don’t make the investments, including putting money in the pockets of the American people with unemployment insurance and direct payments, including honoring our heroes, our health care workers, our transit, teachers, sanitation workers, the — our public employees, if we don’t put that money there, we’re not going to be able — we’re going to pay a big price, worse hit on the economy,” Ms. Pelosi said on MSNBC.
The Congressional Budget Office projected last month that the pandemic would cost the economy about $16 trillion over 10 years, reflecting expectations of dampened consumer spending and business investment in the years ahead.
The Treasury data released on Monday was in line with projections from the Congressional Budget Office and outlined increased spending on unemployment insurance and health care.
“These historically high deficits are driven largely by the necessary response to the pandemic, but once we have defeated this virus, we will need to address our damaged fiscal outlook,” said Michael A. Peterson, the chief executive of the Peter G. Peterson Foundation, a nonpartisan organization that promotes fiscal restraint.
https://www.nytimes.com/2020/07/13/us/politics/budget-deficit-coronavirus.html
The shortfall was nearly as large as the entire 2019 deficit as spending on virus-related efforts outpaced revenues.
Washington recorded a record monthly budget deficit in June as the government tried to combat the economic effects of the virus.Credit...Stefani Reynolds for The New York Times
By Alan Rappeport and Jim Tankersley
- July 13, 2020
The budget deficit, which had already reached almost $1 trillion in 2019, ballooned to nearly $3 trillion in the first nine months of the 2020 fiscal year and is expected to keep growing. The federal government, which has been shoveling cash out the door to fund unemployment benefits, small-business loans and direct financial support to families, is on pace to borrow more money, as a share of the economy, than it has at any time since World War II.
The increases are the direct result of the economy’s swift collapse amid the pandemic and Congress’s efforts to weave a safety net to save people and businesses from financial ruin. Lawmakers have spent nearly $3 trillion thus far, and they could be poised to spend more by month’s end to prevent a sudden wave of layoffs, foreclosures and other rippling economic pain as temporary emergency support approved by Congress expires while the economy is still reeling from the virus.
Continue reading the main story
Real-time indicators suggest that an initial rebound from the trough of the recession, including job gains in May and June, has reversed in recent weeks, as the virus spread quickly across the South and Southwest.
Subscribe to The Times
“We should not be taking our foot off the gas here,” said Senator Michael Bennet, Democrat of Colorado, who has introduced legislation that would automatically continue to supply aid to people and businesses until economic conditions improve. “We have to bridge the American people across the threshold, to a point where people feel more certain about public health.”
Conservative economists have in the past warned that excess borrowing risked slowing economic growth by pushing up borrowing costs for businesses and sending consumer prices soaring.
But many of those economists, including Michael R. Strain of the American Enterprise Institute and R. Glenn Hubbard of Columbia University, have said additional spending is needed in the face of the coronavirus. Economists who had been pushing lawmakers to wind down spending on generous unemployment benefits now say recent economic data suggests that larger deficits will be needed moving ahead — including spending on another round of direct payments to individuals, which could help families bridge the gap as the virus hampers business activity.
‘Stanley Kubrick,’ a Brisk New Biography of a Major Talent
This Is How It All Ends
‘Life of a Klansman’ Tells Ugly Truths About America, Past and Present
Continue reading the main story
ADVERTISEMENT
Continue reading the main story
“To the extent people can get on board with it,” said Karl Smith, vice president of federal policy at the conservative Tax Foundation in Washington, “another check would be good.”
President Trump, who promised to balance the budget within two terms, has shown little appetite for cutting spending and has yet to promote the “fiscal conservative” message that has defined the Republican Party for years.
Instead, Mr. Trump invested heavily in revamping the military and, with the support of only Republican lawmakers, pushed for a $1.5 trillion tax cut, which came nowhere close to producing the revenue to pay for itself, as the administration had promised.
Treasury Secretary Steven Mnuchin has also downplayed deficit worries, arguing that borrowing costs remain low and that the government must spend whatever is necessary to endure the economic disruption caused by the pandemic. He has said the deficit is a long-term concern that should be addressed by spending cuts and policies that spur economic growth.
The June deficit was driven largely by government spending on the Paycheck Protection Program, which by the end of the month had approved more than $500 billion in loans to support small businesses. A Treasury official noted that the loans approved through the program had yet to be forgiven, but because of government accounting rules they were required to be listed as an expenditure.
Over all, government outlays topped $1.1 trillion last month, while receipts were down sharply as a result of tax payments that have been deferred until mid-July. And the deficit recorded in June was higher than the entire budget gap for 2018.
The swelling deficit, while expected on the heels of big spending packages, could further complicate talks for another rescue effort given Republicans’ recent concerns about the financial tab. Lawmakers are preparing to resume negotiations over another round of fiscal support, which could become even more imperative as the virus surges in many parts of the United States.
Continue reading the main story
Yet some lawmakers have begun to publicly fret about the huge sums of money going out the door and have already rejected any attempt to extend more generous unemployment benefits, which are set to expire on July 31.
“We can’t borrow enough money to solve the problem indefinitely,” Senator Mitch McConnell of Kentucky, the majority leader, said in April.
The June deficit blew away the previous monthly record of $738 billion, which was set in April. The shortfall was nearly as large as the $984 billion that the U.S. accumulated for the entire year in 2019 and far larger than last June, when the budget deficit came in at a relatively paltry $8 billion.
For the fiscal year to date, the government is generating red ink at a record clip. So far in fiscal 2020, the deficit is $2.74 trillion, a 267 percent increase from the same period in 2019.
The figures underscore the deep fiscal hole facing the United States as it tries to counteract a pandemic that has thrown millions of people out of work and shuttered businesses across the country.
The Coronavirus Outbreak ›
Frequently Asked Questions
Updated August 6, 2020
- Why are bars linked to outbreaks?
- Think about a bar. Alcohol is flowing. It can be loud, but it’s definitely intimate, and you often need to lean in close to hear your friend. And strangers have way, way fewer reservations about coming up to people in a bar. That’s sort of the point of a bar. Feeling good and close to strangers. It’s no surprise, then, that bars have been linked to outbreaks in several states. Louisiana health officials have tied at least 100 coronavirus cases to bars in the Tigerland nightlife district in Baton Rouge. Minnesota has traced 328 recent cases to bars across the state. In Idaho, health officials shut down bars in Ada County after reporting clusters of infections among young adults who had visited several bars in downtown Boise. Governors in California, Texas and Arizona, where coronavirus cases are soaring, have ordered hundreds of newly reopened bars to shut down. Less than two weeks after Colorado’s bars reopened at limited capacity, Gov. Jared Polis ordered them to close.
- I have antibodies. Am I now immune?
- As of right now, that seems likely, for at least several months. There have been frightening accounts of people suffering what seems to be a second bout of Covid-19. But experts say these patients may have a drawn-out course of infection, with the virus taking a slow toll weeks to months after initial exposure. People infected with the coronavirus typically produce immune molecules called antibodies, which are protective proteins made in response to an infection. These antibodies may last in the body only two to three months, which may seem worrisome, but that’s perfectly normal after an acute infection subsides, said Dr. Michael Mina, an immunologist at Harvard University. It may be possible to get the coronavirus again, but it’s highly unlikely that it would be possible in a short window of time from initial infection or make people sicker the second time.
- I’m a small-business owner. Can I get relief?
- The stimulus bills enacted in March offer help for the millions of American small businesses. Those eligible for aid are businesses and nonprofit organizations with fewer than 500 workers, including sole proprietorships, independent contractors and freelancers. Some larger companies in some industries are also eligible. The help being offered, which is being managed by the Small Business Administration, includes the Paycheck Protection Program and the Economic Injury Disaster Loan program. But lots of folks have not yet seen payouts. Even those who have received help are confused: The rules are draconian, and some are stuck sitting on money they don’t know how to use. Many small-business owners are getting less than they expected or not hearing anything at all.
- What are my rights if I am worried about going back to work?
- Employers have to provide a safe workplace with policies that protect everyone equally. And if one of your co-workers tests positive for the coronavirus, the C.D.C. has said that employers should tell their employees -- without giving you the sick employee’s name -- that they may have been exposed to the virus.
- What is school going to look like in September?
- It is unlikely that many schools will return to a normal schedule this fall, requiring the grind of online learning, makeshift child care and stunted workdays to continue. California’s two largest public school districts — Los Angeles and San Diego — said on July 13, that instruction will be remote-only in the fall, citing concerns that surging coronavirus infections in their areas pose too dire a risk for students and teachers. Together, the two districts enroll some 825,000 students. They are the largest in the country so far to abandon plans for even a partial physical return to classrooms when they reopen in August. For other districts, the solution won’t be an all-or-nothing approach. Many systems, including the nation’s largest, New York City, are devising hybrid plans that involve spending some days in classrooms and other days online. There’s no national policy on this yet, so check with your municipal school system regularly to see what is happening in your community.
In addition to small-business loans, the U.S. has sent more than $267 billion in direct payments to households as of early June. Additional funds have gone to help airlines, local governments and other entities.
House Democrats passed an additional $3 trillion relief package in May that would send money to struggling state and local governments and direct more stimulus payments to taxpayers. That bill was a nonstarter with most Republicans, who recoiled at its high cost and never brought it up for a vote in the Senate.
Continue reading the main story
Now, attention is turning to a plan that could win support from both parties, as well as the White House.
The next bill could cost $1 trillion to $3 trillion. Trump administration officials have been calling for a payroll tax cut, a capital-gains tax holiday, additional targeted relief to industries that have been hit hardest by the pandemic — such as travel and tourism — and another round of stimulus checks. Republicans have also been discussing liability protections for businesses, incentives for companies to rehire workers and additional aid for schools and medical care providers.
But in shying away from piling on more debt, some Republican lawmakers have pointed to monthly job reports indicating that the labor market could be recovering more quickly than some economists expected. The White House has said it wants to see the effects of the earlier stimulus legislation, which has not been fully deployed, before it adds to the tab.
Larry Kudlow, the director of President Trump’s National Economic Council, said on Monday that despite some recent layoff announcements, he was optimistic that the economy would rebound sharply later this year.
“In terms of a V-shaped recovery, if you look at a variety of indicators, including high-frequency indicators, it looks like it’s a story that’s still in place,” Mr. Kudlow said on Fox News.
Continue reading the main story
“If we don’t make the investments, including putting money in the pockets of the American people with unemployment insurance and direct payments, including honoring our heroes, our health care workers, our transit, teachers, sanitation workers, the — our public employees, if we don’t put that money there, we’re not going to be able — we’re going to pay a big price, worse hit on the economy,” Ms. Pelosi said on MSNBC.
The Congressional Budget Office projected last month that the pandemic would cost the economy about $16 trillion over 10 years, reflecting expectations of dampened consumer spending and business investment in the years ahead.
The Treasury data released on Monday was in line with projections from the Congressional Budget Office and outlined increased spending on unemployment insurance and health care.
“These historically high deficits are driven largely by the necessary response to the pandemic, but once we have defeated this virus, we will need to address our damaged fiscal outlook,” said Michael A. Peterson, the chief executive of the Peter G. Peterson Foundation, a nonpartisan organization that promotes fiscal restraint.
https://www.nytimes.com/2020/07/13/us/politics/budget-deficit-coronavirus.html
