The federal government recorded a budget deficit of $1.88 trillion for the first eight months of this budget year, larger than even any annual shortfalls in U.S. history.
The sea of red ink grew as government spending shot up to deal with the coronavirus pandemic and tax revenue shrank when millions lost their jobs.
The deficit for the October-May period was more than double the $738.6 billion booked for the same period last year, according Treasury Department numbers released Wednesday.
The Congressional Budget Office is forecasting that this year’s deficit will hit $3.7 trillion, which would be more than double the record $1.4 trillion deficit set in 2009. That previous record was set when the government was dealing with a financial crisis that had pushed the country into the deepest recession since the 1930s.
The country is now in another recession that began in February. This downturn has already seen much bigger job losses and is expected to be a far worse than the 2007-2009 downturn.
The deficit for just May was $398.8 billion, a record for that month and almost double the deficit for May 2019.
Government spending in May surged 30.2% to $572.7 billion. Lawmakers approved a $600 per week temporary increase in unemployment benefits, economic stimulus payments of up to $1,200 per individual and a Paycheck Protection Program to provide forgivable loans to small businesses who kept workers on their payrolls.
The Paycheck Protection loans will not show up in the budget numbers until businesses begin applying and receiving approval for the bank loans to be forgiven.
Meanwhile, federal revenue fell by 25.1% last month to $173.8 billion as millions of people were losing jobs, meaning less being paid in individual taxes. In addition, the government has extended the deadline when people have to pay their 2019 taxes to July 15, which means a drop in revenue until that time.
For the October-May period, revenues were down 11.2% to $2.02 trillion compared to the same period a year ago, while spending was up 29.5% to $3.9 trillion.
Even before the measures taken to cushion the impact of the coronavirus, the government had been expected to run a deficit topping $1 trillion this year, reflecting lost revenue from President Donald Trump’s 2017 tax cuts and increased spending the White House and Democrats in Congress had agreed on for the military and domestic programs.