April traditionally is the month when the U.S. Treasury collects the most revenue during the year because federal income taxes are due annually April 15.
With the COVID-19 emergency pushing that deadline to July 15 this year and Congress authorizing more than $3 trillion in assistance packages, the Congressional Budget Office’s (CBO) monthly budget review shows the federal government incurred a deficit of $737 billion in April compared with a surplus of $160 billion in April 2019.
Florida Republican U.S. Sen. Rick Scott said the increased spending is building a “mountain of debt” that amounts to, so far, $77,000 per person.
“We have tripled the previous record for the largest single-month deficit. This is the second time in three months we have held a larger monthly deficit than we saw in the peak of the Great Recession,” Scott wrote in a letter sent Wednesday to CBO Director Phillip Swagel.
Scott is an outspoken opponent of the proposed $3 trillion relief package approved by the House on May 15, calling it a “blue state bailout” that rewards Democratic-run states such as New York, Illinois and California for years of fiscal mismanagement.
The GOP-controlled Senate has not taken up the proposed package, which Senate Majority Leader Mitch McConnell called a “totally unserious effort.”
CBO’s report said the federal deficit was about $1.5 trillion over the first seven months of fiscal year 2020, which began in October 2019. That’s $949 billion more than the deficit recorded during the same period last year, according to CBO.
Meanwhile, “revenues were 10 percent lower and outlays were 29 percent higher through April of this year than during the same seven-month period in fiscal year 2019,” the report said, noting “several major factors have sharply reduced receipts: administrative actions (including delayed tax-filing deadlines), declines in wages and other economic activity, and recently enacted legislation.”
CBO projects without changes in tax laws or “significant additional emergency funding,” the federal deficit “would be roughly $3.7 trillion in fiscal year 2020 and $2.1 trillion next year,” according to its preliminary estimates.
Scott said CBO’s projected federal budget deficit “will be the largest in the history of our nation, in excess of the cumulative deficits for the first 200 years of our country’s existence. We will end the year with an excess of $25 trillion in federal debt.
“In the first six months of this fiscal year, we have already created a $1.48 trillion deficit,” Scott wrote.
CBO’s “estimated changes” in revenues this April compared to last include:
• Individual income and payroll taxes combined decreased by $258 billion (or 55 percent);
• Corporate income taxes fell by $41 billion (or 92 percent), “largely because of the delay in the tax-filing deadline for corporations.”
Scott predicted a significant portion of deferred taxes never will be paid.
Scott, a former two-term Florida governor, wants CBO to answer the following questions:
• How much of the revenue lost because of tax deferrals does CBO anticipate will be collected, and when?
• Assuming no additional policy changes, how large does CBO anticipate the deficit will grow by the end of the fiscal year?
• What provisions enacted into law as a response to the coronavirus are having the largest negative effect on the nation’s deficit?
“All levels of government must start making hard choices to put our nation on a path to recovery – recovery from this virus and from the economic devastation it has caused,” Scott concluded.