U.S. Posts Record Monthly Budget Gap on Small-Business Relief
The U.S. posted its worst-ever budget deficit in June as federal government spending more than tripled from a year earlier in a bid to mitigate the economic destruction caused by the coronavirus pandemic.
The nation’s budget gap expanded to $864.1 billion during the month, reflecting a record $1.1 trillion in outlays tied in large part to a surge in spending by the Small Business Administration that oversees the Paycheck Protection Program.
The nation’s deficit in the first nine months of the current fiscal year totaled $2.7 trillion, almost three times as big as the shortfall registered for the entire 2019 fiscal year. Spending so far in fiscal 2020 is a whopping $5 trillion.
About half of the total outlays in June reflected $511.4 billion in spending by the SBA. The PPP provides loans and loan guarantees to small firms hurt by the pandemic. The agency’s spending for its business loans program vaulted to $496.3 billion last month.
Spending in the federal additional unemployment compensation program rose to $80.4 billion, while outlays for state unemployment benefits totaled $35.2 billion. The jobless rate, which soared to a record-high 14.7% in April, was at a still-elevated 13.3% a month later as millions of Americans lost their jobs during state government lockdowns of economies to control the spread of the Covid-19 virus.
The hit to the economy from the pandemic and an extension of the tax-filing deadline also weighed on revenue during the month. Receipts declined 27.9% from June 2019 to $240.8 billion. So far this fiscal year, the nearly $2.3 trillion in receipts is down from $2.6 trillion in the same nine months last year.
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