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.
Russia has defaulted on some of its foreign debt as a tidal wave of western sanctions threatens its economy. The credit ratings agency S&P has placed Russia under "selective default" after it tried to pay its latest obligations in rubles. Russia now has a 30-day grace period to resolve the issue, but Moscow is threatening to take legal action. George Seay, Annandale Capital's CEO, joined Cheddar to break down what this means, and how Russia defaulting on its debt might impact the global economy.
China's zero-covid policy may pose a wide-ranging threat to the local, and overseas economy. Analysts voicing concern on the strict lockdown in Shanghai as businesses and ports remain shuttered, potentially threatening the global supply chain. Shehzad H. Qazi, Managing Director, China Beige Book International joined Cheddar's Opening Bell to discuss.
The consumer price index in March rose by 8.5% from a year ago, the fastest annual gain since December 1981 and one-tenth of a percentage point above the estimate. The rise in prices is driven by strong consumer demand, supply-chain disruptions and skyrocketing energy costs related to Russia's invasion of Ukraine. Heather Boushey, Council of Economic Advisers Member for President Biden, joined Cheddar's Opening Bell to give her reaction to the latest inflation numbers.
As China faces backlash from its response to Russia's invasion of Ukraine, the U.S. is strengthening its relationship with India. India is expected to become one of the top three economic powers in the world over the next 10 to 15 years, bolstered by technological advances and the manufacturing sector. Samir Kapadia, CEO and Principal of The Vogel Group, joined Cheddar to discuss the state of India's economy, and how it can only grow from here.
With the midterms just a few months away, record-setting inflation is weighing on the minds of voters. According to a recent CNN poll, a majority of voters said the state of the economy will play a key role in how they cast their ballot, and 55% said the same of inflation. Joseph Zeballos-Roig, Economic Policy Reporter for Insider, joined Cheddar to discuss how inflation could shape the 2022 midterms, and ultimately determine the balance of power in Congress.
The Brooklyn subway attack is the latest in a string of high-profile crimes that have plagued New York City. The surge in crime comes as cities across the country are trying to recover from the pandemic and bring life back to a sense of normal. Joseph Giacalone, professor at John Jay College and retired NYPD sergeant, joined Cheddar's Opening Bell to explain what's behind the rise in crime, and what can be done about it.
After failing to take control of northern and western Ukraine, Russia is shifting its focus to the east. As both sides continue to pour reinforcements into the region, officials are expecting more conventional combat involving tanks, artillery, and aircraft that could shape the war's biggest battles yet. Doug Collins, a former Georgia congressman, joined Cheddar to discuss the change in Russia's tactics.
Catching you up on what you need to know on Apr 14, 2022, with the U.S. sending $800M to Ukraine, updates on the subway shooting in Brooklyn, Gov. Abbott putting a pause on his southern border truck inspections, migrants being bused from Texas to Washington, DC, the travel mask mandate extending until May 3, and more.
This March 19, 2018, file photo shows the Yelp app on an iPad in Baltimore. Yelp reports financial results Thursday, Nov. 7, 2019. The online review service will cover the travel expenses of employees who have to travel out of state for abortions, joining the ranks of major employers trying to help workers affected by restrictions being placed on the procedure in Texas and other states. The benefit announced Tuesday, April 12, 2022 covers Yelp's entire workforce of 4,000 employees, but seems most likely to have its biggest immediate impact on its 200 workers in Texas, which has passed a law banning abortions within the state after six weeks of pregnancy. (AP Photo/Patrick Semansky, File)
