WASHINGTON — The US budget deficit widened to a record-high $864 billion last month due to the federal government’s extraordinary response to the coronavirus pandemic, the Treasury Department said on Monday.
In June 2019, the budget deficit was just $8 billion.
Federal spending rose to more than $1.1 trillion in June, more than twice what the US government spends in a typical month. The amount of tax revenue collected by the federal government remained largely flat, at about $240 billion, in part because the Treasury Department delayed the tax filing deadline until July.
The huge surge in June pushed the budget deficit for the first nine months of the fiscal year to $2.7 trillion.
June’s deficit figures highlight just how much havoc the coronavirus pandemic has wreaked on US budgeting. In prior years, the federal deficit was considered large when it approached or eclipsed $1 trillion for an entire year. America spent about $2 trillion more than it took in in tax revenue from April to June alone.
Congress in March approved $2 trillion in spending that took several months to take effect as the economy contracted due to the pandemic. Those efforts included larger benefits for unemployed Americans, $1,200 stimulus payments, and small business relief. Economists say that funding was badly needed to prevent tens of millions of Americans from being hurt by the pandemic, and that more remains necessary.
‘‘Big government deficits are the only thing keeping the US economy on life support and anti-deficit rhetoric threatens to pull the plug,’’ said Nathan Tankus, research director of the Modern Money Network. ‘‘The alternative is mass defaults, evictions, and bankruptcies which will devastate the United States.’’
The big increase in the deficit from May to June is largely due to an accounting change related to the more than $500 billion in small business aid approved by Congress through the Paycheck Protection Program. Previously, Treasury did not count the PPP’s forgivable loans as spending, but that changed from April to June. Most of the PPP loans to companies are expected to be forgiven and paid off by the government.
Some budget experts believe US spending will have to be cut after the economy improves.