WASHINGTON — The United States budget deficit grew to a record $864 billion in June as the federal government continued pumping money into the economy to prop up workers and businesses affected by the coronavirus pandemic, the Treasury Department said on Monday.
The deficit was driven largely by government spending related to the Paycheck Protection Program, which by the end of June had approved more than $500 billion in loans to support small businesses. 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.
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.
The June deficit blew past the previous monthly record of $738 billion, set in April. It was nearly as large as the $984 billion shortfall that the U.S. accumulated for the entire year in 2019 and far larger than those in previous years.
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. 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.
With the virus still posing an economic threat, lawmakers have been calling for more relief. Some of the fiscal support provided in the last bill, which Congress passed in March, is set to expire at the end of July.
House Democrats passed a $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 non-starter with most Republicans, who recoiled at its high cost and never brought it up for a vote in the Senate.
Now, attention is turning to a plan that could win support from both parties, as well as the White House.
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. The next bill could cost $1 trillion to $3 trillion.
Some Republican lawmakers have become hesitant to pile on more debt, especially after monthly job reports have indicated 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.
Speaker Nancy Pelosi said on Monday that failing to make a robust investment in the economy would be more costly in the long run.
“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 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.
The Congressional Budget Office projected last month that the pandemic would cost the economy approximately $16 trillion over the next 10 years, reflecting expectations of dampened consumer spending and business investment in the years ahead.
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