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.
Transportation Secretary Pete Buttigieg joined Cheddar's Michelle Castillo from South By Southwest to boost President Biden's bipartisan infrastructure legislation and talk about the big transportation issues of the day, including electric vehicle charging infrastructure and the future of public transit. "It means we have a huge wind at our back delivering on the kinds of transportation solutions that are going to define the 2020's 2030s, 2040s even," he said. "And that's what makes it exciting to come to South by Southwest and talk with some of the people who are following these technologies and ideas the most closely and talk about where we're headed." Buttigieg also touched on the "Don't Say Gay" legislation in Florida, noting that such legislative pushes were likely coming from politicians deflecting from lacking answers to pressing economic concerns, in his opinion.
Following President Biden's executive order that could lead toward regulating digital currency in the United States. Representative Josh Gottheimer (D-N.J. 5th District), the congressman responsible for proposing a bill to regulate stablecoins, digital assets backed by fiat currencies, joined Cheddar News to discuss the bill. "I just want to make sure that we're doing everything we can to be helpful to encourage this innovation and growth here in the United States," he said.
European antitrust regulators gave Amazon approval for its MGM acquisition deal. Amazon expects MGM's collection of content will help it compete in the increasingly crowded world of streaming services.
Lisa Whalen, managing director of automotive and mobility analysis at Morning Consult, joins Cheddar News to discuss Uber and Lyft's decision to enact price surcharges on riders.
Senator Jon Tester (D-Mont.) joined Cheddar News to talk about a range of topics including Sarah Bloom Raskin's recent withdrawal as a nominee to the Federal Reserve, the impact the Federal Reserve will have on inflation, and the ongoing crisis in Ukraine. "I think it's unfortunate she had to withdraw. I think she was very, very qualified for the position by everything she's done in her past, especially in the area of cyber," he said. "She would have been good to have on the Fed."
With a zero-covid policy in China, country officials are imposing lockdowns in the region in an attempt to control the spread. With China being home to about one-third of global manufacturing, these lockdowns are wreaking havoc on the already fragile supply chain, causing disruption to production of phones and cars alike. Suketu Gandhi, Supply Chain Partner at Kearney joined Cheddar's Azia Celestino to discuss.
Markets opened higher this morning as oil prices fall and investors await a decision from the Federal Reserve. Keith Fitz-Gerald, Chief Investment Officer, Fitz-Gerald Group joined Cheddar's Opening Bell to discuss.
Catching you up on what you Need to Know on March 16, 2022, with updates on Ukraine and Russia, a container ship gets stuck in the Chesapeake Bay, Disney employees stage a walkout over the "Don't Say Gay" law in Florida, and NASA completes its first spacewalk of 2022.
With the Fed about to the announce a 25 basis point interest rate hike on Wednesday, what exactly does this mean for investors, consumers, and businesses?
Ukrainian President Volodymyr Zelenskyy has summoned the memory of Pearl Harbor and the Sept. 11 terror attacks in an impassioned video plea to Congress to send more help for Ukraine’s fight against Russia.
