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US Budget Deficit Hits Record $2.81T   08/13 06:08

   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.

   SILVER SPRING, Md. (AP) -- 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 budgetary shortfall is expected to eventually reach levels for 
the fiscal year that ends Sept. 30 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 to red ink that spilled in 
the spring months when the government tried to revive an economy that all but 
ground to a halt due to the coronavirus outbreak.

   Last month's deficit was sharply lower than June's $864 billion, in part 
because the government collected a record amount tax revenue in July --- $563 
billion --- after extending the filing deadline to July 15. That extension 
allowed Americans more time to sort through the economic havoc wrought by the 
pandemic.

   Outlays to 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 last year, Treasury officials said, crediting the 
"income replacement" provided by various government aid packages. In other 
words, unemployment benefits and other aid are still taxable.

   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.

   Congress has already passed rescue packages totaling nearly $3 trillion this 
year, but Democrats and Republicans remain far apart on another relief bill, 
just as an expanded unemployment benefit of $600 per week expired on July 31.

   President Donald Trump issued a series of presidential directives last 
weekend 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.

   Democrats in the House 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 
this 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 a 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 
deficit, hitting $1.4 trillion in 2009 as it tried to dig the country out of 
recession. The U.S. blew past that mark in May.

 
 
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