CBO: May Deficit Down From April, But Still Huge Amid Pandemic
WASHINGTON — The Congressional Budget Office estimated that the federal deficit in May was $424 billion, substantially lower than April’s $738 billion but still the second-largest monthly shortfall since records have been kept.
The deficit for the first eight months of fiscal 2020 was about $1.9 trillion, the CBO said, or $1.2 trillion greater than during the same period the previous year.
The Treasury Department will release official figures later this week, but the CBO’s preliminary estimates are typically very close to the official numbers. The budget office’s deficit estimate for April was within $1 billion of the final Treasury figures, for example.
The agency’s monthly report shows the continuing impact of the plunge in economic activity due to the coronavirus pandemic and unprecedented increase in federal spending measured in the trillions of dollars to provide aid to hospitals, businesses, state and local governments, individuals and others.
In one telling calculation, the CBO compared the growth of spending during the first six months of fiscal 2020 preceding the pandemic to spending in the two months since the pandemic hit in March.
Between October and March, spending totaled $2.3 trillion, representing a growth of $149 billion, or 7% compared with the first six months of fiscal 2019. By contrast, over the past two months of April and May, spending totaled $1.6 trillion, an increase of $763 billion, or almost double the amount spent during the same two months last year.
Comparing May 2020 to May 2019, revenue dropped by $58 billion, or 25 percent, to $175 billion, compared with the same month last year. Most of the drop resulted from a $51 billion decrease in individual income and payroll taxes resulting from a decline in worker wages, temporary changes in the law including allowing employers to defer payment of payroll taxes, and income tax refunds.
Spending in May grew by $159 billion, or 36 percent, to $598 billion compared with last year. If not for the shift of some federal payments from June to May in 2019, spending would have been 53% higher in May 2020 than in May 2019.
Major changes in May spending include:
Unemployment compensation rose to $93 billion in May 2020 from $2 billion in May 2019, with more than half of the rise attributable to a temporary, $600 increase in the weekly benefit enacted in March.
Refundable tax credits increased to $53 billion from $3 billion last May. The increase is primarily due to “recovery rebates” of up to $1,200 per individual, also included in the March aid package.
Small Business Administration spending rose to $35 billion from $98 million during the same month a year ago because of loans and loan guarantees to small businesses, aimed at keeping workers employed.
The CBO estimates that the deficit for the fiscal year ending Sept. 30 will hit a record $3.7 trillion. That is nearly quadruple the roughly $1 trillion deficit that CBO had projected in March before the pandemic spread.
©2020 CQ-Roll Call, Inc., All Rights Reserved
Distributed by Tribune Content Agency, LLC.
In The News
WASHINGTON — House Appropriations Committee Chairwoman Nita Lowey, D-N.Y., released the text of a $2.3 trillion omnibus spending bill Monday afternoon consisting of all 12 fiscal year 2021 appropriations bills, $900 billion coronavirus relief, and other authorizations. In addition to the COVID relief package, it includes... Read More
WASHINGTON - The House has passed a week-long stopgap bill to keep the government open through Dec. 18 so lawmakers can continue to negotiate both a longer-term spending package and coronavirus relief. The bill passed 343-67. If the stopgap measure hadn't been adopted, funding for the... Read More
WASHINGTON — Lawmakers were finalizing a one-week stopgap funding measure Tuesday to avoid a partial government shutdown starting Friday at midnight, with the only add-ons expected to be a package of expiring health care program extensions, according to Senate Appropriations Chairman Richard C. Shelby. The "clean" continuing resolution, as Shelby... Read More
Congress returned Monday from its Thanksgiving break hoping to avoid a government shutdown looming at the end of next week — with President Donald Trump being a potential wild card. Hopes for a new coronavirus stimulus package are slim as lawmakers focus on the more limited goal of keeping the government... Read More
WASHINGTON — Top appropriators reached bipartisan agreement Tuesday on a framework for an omnibus spending package that would avoid a partial government shutdown next month. The compromise forged between the leaders of the House and Senate Appropriations committees sets spending allocations for the dozen bills that fund federal agencies... Read More
WASHINGTON - With over 10.5 million Americans so far infected with COVID-19, the U.S. health care system’s focus has understandably been on strategies for combating the virus. Yet when the nation is finally able to shift back to handling longer-term health care issues, The Concord Coalition... Read More