Budget deficit hits an all-time high of $864B

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 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 trillions of dollars Congress provided to cushion the impact of the widespread shutdowns 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 year 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 Great Recession.

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 cost of the Paycheck Protection Program in June was $511 billion. That reflected a charge to the government for all bank loans made under the program even though the government will not have to pay out funds until it is determined whether the businesses met the criteria for having the loans forgiven.