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US budget deficit topped a record-breaking $864 billion in June due to COVID-19 spending

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  • The budget deficit reached $867 billion in June, the Treasury said on Monday.
  • The federal deficit so far this fiscal year stands at $2.7 trillion.
  • The widening deficit is the product of coronavirus emergency spending by the federal government.
  • Visit Business Insider’s homepage for more stories.

The US budget deficit surged to a record-breaking $867 billion in June, the Treasury Department said on Monday. The increase is the product of the federal government’s efforts to combat the coronavirus pandemic and its economic fallout. 

The government collected around $240 billion in tax revenue in June, Treasury said, and federal spending overall reached $1.1 trillion.

In stark contrast, the deficit — or the gap between what the government collects in tax revenues and ultimately spends — in June 2019 was only $8 billion. The budget deficit last year was $984 billion.

Congress and President Donald Trump in March authorized the $2 trillion CARES Act, which poured cash into every corner of the economy. It implemented a $600 weekly federal supplement to state unemployment benefits and sent a wave of one-time, $1,200 stimulus payments to Americans earning below $75,000 a year.

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The law also created the Paycheck Protection Program to provide a federal lifeline to small businesses with forgivable loans. Around 75% of that direct aid has gone out so far, according to the Peterson Foundation.

The public health emergency stemming from the virus and its economic effects has blown a massive hole into the federal budget. The deficit nine months into the 2020 fiscal year is $2.7 trillion.

But many economists say the federal government needs to keep up its hefty spending to prevent the pandemic from sparking a wave of individual bankruptcies and business failures.

“Big government deficits are the only thing keeping the US economy on life support and anti-deficit rhetoric threatens to pull the plug,” Nathan Tankus, research director of the Modern Money Network, told The Washington Post. “The alternative is mass defaults, evictions and bankruptcies which will devastate the United States.”

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