This Sept. 18, 2019, file photo shows the view of the U.S. Capitol building from the Washington Monument in Washington. The federal government incurred the biggest monthly budget deficit in history in June 2020 as spending on programs to combat the coronavirus recession exploded while millions of job losses cut into tax revenues. The Treasury Department reported Monday, July 13, 2020 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.(AP Photo/Patrick Semansky, File)
By Martin Crutsinger
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 means 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 the 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.
As gas prices surge amid the Russian invasion of Ukraine, other nations could potentially transition faster to using clean energy than previously expected. Philip K. Verleger, a senior fellow at the Niskanen Center, joined Cheddar News to explain how this could be a possibility in the near future. "Part of the reason I think we have this invasion and the tantrum that's being thrown by Russia, terrible tantrum, is because the Russians were trying to slow down the transition," he said. "Ironically they speeded it up."
Following the invasion of Ukraine, a multitude of Western companies have paused doing business with Russia. PepsiCo, Coca-Cola, McDonald's, and Starbucks are the most recent companies to temporarily cease operations in Russia. Dean of Miami Herbert Business School at the University of Miami, John Quelch, joined Cheddar News to discuss what message this sends to Russia and the Russian consumer. “I would not underestimate the collective strength of all of these multinational companies, essentially coming together to make their collective statement in support of the political statements that have come out of Washington," he said.
The war in Ukraine continues to reveal heartbreaking gut-wrenching stories. The war in itself is not only devastating but also expensive. Experts estimate that Russia is draining nearly $20 million dollars each day to continue occupying and invading Ukraine. All this could force the country to turn to cryptocurrencies. It's a major turn for the country that briefly considered outlined digital assets entirely, but it could also have serious implications for cryptos. Managing Director at Quantum Fintech Group, Harry Yeh, joined Cheddar to discuss more.
President Biden announced a ban on Russian oil and natural gas imports to the U.S. in response to its invasion of Ukraine, a move he warned could lead to an even greater surge in gas prices. The ban is prompting a conversation about the current oil production levels in the U.S. and whether or not the industry can ramp up production to soften the blow to American families at the gas pump. Clark Williams-Derry, Energy Finance Analyst with the Institute for Energy Economics and Financial Analysis, breaks down the state of the U.S. oil industry and how the ban might impact production levels here at home.
PepsiCo, Coca-Cola, McDonald’s, and Starbucks are the latest American food brands to have halted business operations in Russia after having faced scrutiny and criticism for originally failing to do so amid the country's invasion of Ukraine.
As Russia intensifies its war on Ukraine, President Biden announced a ban on oil imported from the aggressor nation. Critics of Russia have said this would be the best way to force Putin to pull back, but curbs on Russian oil exports are expected to send already skyrocketing oil and gas prices even higher, further impacting consumers, businesses, financial markets, and the global economy. Leslie Beyer, CEO of the Energy Workforce and Technology Council, joined Cheddar News' Closing Bell to discuss. "It's certainly going to increase pricing, but it is the right thing to do," she said. "The industry itself has already pulled out of the significant portion of its operations in Russia."
Sports Betting in the U.S. is booming. According to industry experts, we could see another boom this year as more states move towards statewide legalization of sports wagering. While this comes as huge news for fans, there are some very real concerns as to whether or not sports betting potentially poses a threat to public health. Senior Clinician at the Caron Treatment Centers, Eric Webber, joined Cheddar to discuss more.
The Biden administration has made gender policy a core part of how it governs. The president established the first Gender Policy Council. It's on the same level as the National Security Council, Domestic Policy Council and National Economic Council, putting the interests of women and other underserved groups at the table for the most important policy discussions.
Cheddar News sat down with Jennifer Klein, executive director and co-chair of the White House Gender Policy Council, to discuss the council's work and its significance during Women's History Month.
State Representative Jessica González, Vice Chair of the Texas House LGBTQ Caucus, joins Cheddar News to discuss the latest Texas anti-transgender directive.
