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Federal Spending, Deficit Hit Record High After Coronavirus Relief Bills

   DailyWire.com
WASHINGTON, DC - JUNE 30: U.S. Secretary of the Treasury Steven Mnuchin testifies before the House Financial Services Committee on Capitol Hill on June 30, 2020 in Washington, DC. Treasury Secretary Mnuchin and Federal Reserve Chairman Jerome Powell testified on their agencies’ response to the coronavirus pandemic. (Photo by Tasos Katopodis/Getty Images)
Photo by Tasos Katopodis/Getty Images

Following massive spending to help cushion the economic blow of coronavirus-related lockdowns, the United States government posted the single largest deficit in history in June, an $864 billion budget shortfall.

The total for 2020 so far also exceeds previous nine-month periods, with the United States posting an astounding $2.74 trillion shortfall for the first three quarters of the fiscal year, according to CNBC. Experts anticipate that, by the end of fiscal 2020, the budget deficit could top $3 trillion.

Although the federal government was already on a spending spree, the introduction of the novel coronavirus, and the subsequent, nationwide economic lockdown, are responsible for June’s record shortfall. The U.S. government shelled out trillions in emergency relief, including a $1,200 check to every American who met certain qualifications, to help curtail the virus’s devastating economic effects.

“The Treasury Department reported Monday that 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,” CNBC noted. “That amount was also tied to the trillions of dollars Congress has provided to cushion the impact of the widespread shutdowns that occurred in an effort to limit the spread of the viral pandemic.”

The previous one-year record for a budget deficit is $1.4 trillion, the deficit in 2009 after the United States took on the extraordinary task of bailing out a number of major corporations following the “Great Recession” of 2008.

The federal government spent $1.1 trillion just in June, and a fourth coronavirus relief package has been on the table since late May. House Democrats proposed an additional $3.3 trillion in spending as soon as Congress returned from its spring recess – a draft bill that has been on the table in the Senate for nearly six weeks as legislators decide whether to issue a second round of individual payments and whether to bail out states facing their own record deficits.

There are some basic reasons, though, as to why the Trump administration’s budget deficits are consistently higher than those of other administrations. The Trump White House has prioritized paying down the national debt, which is lessening that number while allowing the deficit to inflate. While the strategy leads to temporarily higher deficit numbers, it may be in the United States’ long-term advantage to focus on the debt.

Elements of the coronavirus relief package also had immediate – but not long-term – effects on the deficit. The Treasury Department is currently counting Paycheck Protection Program loans as debt, though many PPP recipients will eventually pay back the money they were lent through the program.

The deficit is also specifically affected by the White House’s decision to delay the tax deadline until July 15th, leaving the government without its most significant source of revenue until far later in the fiscal year.

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