U.S. Deficit Totaled $2.8 Trillion From October Through July -- Update
By Kate Davidson
WASHINGTON -- The federal deficit more than tripled in the first
10 months of the fiscal year, as government spending to combat the
coronavirus continued to outpace federal tax collection, the
Treasury Department said Wednesday.
The U.S. budget gap totaled $2.8 trillion from October through
July, 224% bigger than the $867 billion gap during the same period
a year earlier. The government has spent $5.6 trillion so far in
the fiscal year that ends Sept. 30, 51% more than a year earlier,
fueled in large part by the economic relief legislation Congress
enacted in March to keep households and businesses afloat during
Total receipts for the fiscal year are down just 1%, totaling
$2.8 trillion, thanks to an influx of revenue last month as
individuals and corporations made tax payments that the government
had delayed in April and June. Those figures mostly reflect revenue
based on income and business activity from before the pandemic, and
are likely to shrink in the months ahead as the economy slowly
emerges from a deep downturn that led to widespread business
closures and millions of layoffs.
Federal spending has soared after Congress approved trillions in
economic relief measures, including enhanced unemployment benefits,
stimulus checks for households and emergency small-business loans.
That spending began to taper off last month: Outlays totaled $626
billion, 70% more than July 2019 but about half of what they were
in June, when the government issued billions in emergency loans to
Higher spending on jobless benefits, health care, stimulus
checks and aid for state and local governments drove the increases
Over the 12 months that ended in July, deficits as a share of
gross domestic product totaled 15.1%, the highest 12-month
shortfall since February 2010, when the deficit-to-GDP ratio was
Talks over another major aid package have stalled on Capitol
Hill, in part over concerns from some Republicans about rising red
ink. Deficits typically rise during recessions, as spending on
safety-net programs like jobless benefits and food assistance
increases, while unemployment weighs on tax revenue.
The U.S. budget gap was already widening in the years leading up
to the coronavirus pandemic, following 2017 tax cuts that
constrained revenues and two bipartisan budget deals that boosted
The latest deficit figures are in line with earlier estimates
from the Congressional Budget Office, which has projected the
annual deficit could total $3.7 trillion in the fiscal year that
ends Sept. 30.
Swelling deficits have led to a surge in government borrowing.
The Treasury Department said last week it expects to borrow $4.5
trillion in the fiscal year that ends Sept. 30, more than triple
last year's $1.28 trillion.
Write to Kate Davidson at email@example.com
(END) Dow Jones Newswires
August 12, 2020 15:40 ET (19:40 GMT)
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