By Kate Davidson
WASHINGTON -- The federal budget deficit shrank last month from a year earlier as households and businesses made tax payments that had been delayed from April, the Congressional Budget Office estimated.
The CBO on Monday said the budget gap last month totaled $61 billion, compared with $120 billion in July 2019, as revenue jumped. The Internal Revenue Service pushed back the April 15 tax-payment deadline in an effort to keep more cash in Americans' wallets in the early weeks of the coronavirus pandemic.
Tax receipts totaled $563 billion, compared with $312 billion in the same period a year earlier, which CBO attributed to the delayed payment deadlines.
But the agency noted receipts were still down 10% between April and June from a year earlier, reflecting the deep economic downturn triggered by the pandemic, which triggered widespread business closures and layoffs that have reduced tax revenue for the government.
The deficit for the first 10 months of fiscal year 2020 reached $2.8 trillion, CBO estimated, $1.9 trillion more than the deficit recorded in the same period last year. Revenues were 1% lower and outlays were 51% higher in the period.
Federal spending has soared after Congress approved trillions in economic relief measures, including enhanced unemployment benefits, stimulus checks for households and emergency small-business loans. Outlays totaled $624 billion last month, a 68% increase from the same period last year.
Outlays more than doubled from April through July, after rising 7% in the first six months of the fiscal year, CBO said. Higher spending on jobless benefits, small-business loans, stimulus payments and health care were among the biggest drivers of increased outlays, while net interest costs declined thanks to lower inflation and interest rates.
The CBO has projected the annual deficit could total $3.7 trillion in the fiscal year that ends Sept. 30. The gap could widen further if Congress and the White House agree on another round of emergency spending, which economists argue is vital to keep households and businesses afloat until the economy begins to recover. But the talks have stalled amid disagreements over how much aid is necessary and concerns from some Republicans over rising deficits.
Swelling deficits have led to a surge in government borrowing. The Treasury Department said last week it expects to borrow $4.5 trillion in the fiscal year that ends Sept. 30, more than triple last year's $1.28 trillion.
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