The government’s extensive coronavirus spending pushed the U.S. budget deficit to a record high $3 trillion for the 12 months ending with June, the Treasury Department announced Monday.
Federal spending topped $1.1 trillion in June, more than twice the government’s average monthly spending, pushing the monthly deficit to a record high of $864 billion. During June of last year, the deficit was only $8 billion.
The annual deficit is projected to reach $3.7 trillion for the fiscal year ending September 30, according to the Congressional Budget Office. However, if Congress adds to the $3.3 trillion in new spending it has already authorized since March, the deficit could climb even higher.
The widening gap was also affected by the Trump administration’s decision to extend the tax filing deadline for Americans in order to soften the economic blow of the pandemic.
The surge in stimulus spending as lockdown and stay at home orders across the country forced businesses to shutter and lay off workers bumped the deficit to $2.7 trillion for the first nine months of the fiscal year since last October. Among the stimulus measures Congress approved were $1200 checks for individuals in the massive $2.2 trillion CARES Act as well as $670 billion for the Paycheck Protection Program, intended to help struggling businesses make payroll.
One of the reasons for the deficit increase from May to June was the Treasury Department’s decision to begin counting PPP loans as part of the deficit, since most of the loans are expected to be forgiven by the government.
The previous largest monthly deficit recorded in the U.S. was $234 billion before the coronavirus outbreak ignited record levels of stimulus spending.
The record deficit levels come as several states, including Texas, Florida, Arizona, and California record surges in coronavirus cases, causing some governors to order non-essential businesses to suspend operations once again. The administration meanwhile is weighing whether to approve a second round of stimulus payments in the coming months.