SILVER SPRING, Md. -- The U.S. budget deficit climbed to $2.81 trillion in the first 10 months of the budget year, exceeding any on record, the Treasury Department said Wednesday.
The nation's budget shortfall for fiscal 2020, which ends Sept. 30, is expected to eventually reach levels that will be more than double the largest annual deficit on record.
The federal government rang up a $63 billion deficit in July, the department reported. That's a relatively modest amount compared with red ink that spilled in the spring months when the government tried to revive an economy that all but ground to a halt in the coronavirus outbreak.
July's deficit was sharply lower than June's $864 billion, in part because the government collected a record amount of tax revenue in July -- $563.5 billion -- after extending the income tax filing deadline to July 15. That extension allowed Americans more time to sort through the economic havoc wrought by the pandemic.
Outlays by the Small Business Administration, which doled out $511 billion as part of the Paycheck Protection Program in June, fell to about $26 billion in July.
So far this budget year, government receipts total $2.82 trillion, off just 1% from the same period a year ago, Treasury Department officials said, crediting the "income replacement" provided by various government aid packages, including expanded unemployment benefits and other aid, which are treated as taxable income.
Outlays so far this budget year total $5.63 trillion, a 50% increase over the $3.73 trillion at this point in 2019, with the vast majority of the extra spending related to fortifying the country's economy in the wake of the coronavirus pandemic.
While Congress has already passed rescue packages totaling nearly $3 trillion this year, Democrats and Republicans remain far apart on another relief bill, just as an expanded unemployment benefit of $600 per week expired on July 31.
On Saturday, President Donald Trump issued a series of presidential directives intended to prolong the extended unemployment benefits at $400 a week, with 25% to be paid for by the states. But it's unclear how much of an economic boost the extension would provide, given the economic uncertainty and funding that could run dry after five weeks.
Last spring, House Democrats passed another bill with $3 trillion in aid, but the Republican-led Senate is pushing for a package closer to $1 trillion and did not bring the House bill up for a vote before going on August recess.
The Congressional Budget Office has forecast a $3.7 trillion deficit for the current fiscal year as the country fell into a deep recession in February, ending a record expansion of nearly 11 years.
The Trump administration is predicting that the economy will bounce back in second half of 2020, but many private forecasters are concerned that consumers will dial back spending as infections surge in states like Florida. Consumer spending drives the U.S. economy, making up about 70% of all economic activity.
Last month, the government reported that the gross domestic product declined at a record 32.9% annual rate in the April-June quarter, as a resurgence of the viral outbreak pushed businesses to close for a second time in a number of regions.
For 20 consecutive weeks, more than 1 million Americans have sought jobless benefits. The unemployment rate fell last month to 10.2%, still higher than any point during the financial crisis of 2008-2009.
That was also when the federal government set the record for an annual budget deficit, hitting $1.4 trillion in 2009 as it tried to dig the country out of recession. The federal government blew past that mark in May.
Accumulating deficits add to the overall federal debt, which totaled more than $26.5 trillion as of Monday. That figure includes more than $6 trillion the government owes itself, including about $2.9 trillion borrowed from the Social Security Trust Fund, according to Treasury Department reports.
