U.S. budget deficit hits record high $1.88 trillion

WASHINGTON — The federal response to the coronavirus outbreak is pushing the U.S. government’s budget deficit to unprecedented levels.

On Wednesday, the Treasury Department said the gap between what the U.S. government spends and what it collects in taxes widened to $1.88 trillion for the first eight months of this fiscal year — an all-time high.

America’s federal deficit for all of 2019 was $984 billion, which already was considered unusually large.

The soaring deficit reflects the huge spending increases approved by Congress in response to the economic downturn caused by the coronavirus outbreak.

Most economists say the spending was necessary to stabilize an economy rocked by double-digit unemployment and a severe contraction in economic growth.

Those efforts are exacerbating America’s fiscal imbalance. The nonpartisan Congressional Budget Office has estimated the federal deficit will hit $3.7 trillion by the end of this fiscal year. The Committee for a Responsible Federal Budget pegged the number at $3.8 trillion.

“If policymakers had spent the past five years addressing the debt rather than passing massive tax cuts and spending hikes, we could have offered more economic support and still had lower deficits,” said Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, which supports lower deficit spending.

In April, the monthly budget deficit rose to a record $738 billion, due to both a large drop in tax revenue and a surge in federal spending. The monthly deficit for May came in at about $400 billion, a substantial decrease from April but still far beyond normal levels.

These estimates don’t include the impact of the federal government’s approximately $600 billion rescue effort for small businesses, Treasury officials said. That funding is classified as a loan rather than an expenditure, but most of the loans are expected to be forgiven, meaning the real deficit number likely is higher.

The deficit increase includes about $300 billion in spending on the $1,200 stimulus checks allocated to more than 100 million Americans. It also reflects hundreds of billions of dollars spent t for federal relief efforts.

White House officials have expressed concern about the growing price-tag of the relief efforts, but President Donald Trump said last week that the administration will support a fourth coronavirus recovery package.