Coronavirus Economy: CBO Says Government Receipts Off 55% For April As Spending More Than Doubled

The Congressional Budget Office reported tax receipts for April, usually the government’s biggest revenue month, fell 55% amid coronavirus shutdowns and the decision to delay the tax deadline to July.

Individual income and payroll tax payments were off $258 billion or 55% compared to April 2019 while corporate taxes were off $41 billion or 92%, the CBO estimated. Total spending for the month more than doubled to $976 billion as the government sought to mitigate the impact of pandemic-forced economic damage. Total receipts for the first seven months of the fiscal year were off 10%.

“All told, the federal budget deficit was about $1.5 trillion in the first seven months of fiscal year 2020, by CBO’s estimate, $949 billion more than the deficit recorded during the same period last year. 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 CBO said.

Medicare outlays nearly tripled to $152 billion as COVID-19 hit older Americans particularly hard. Outlays for unemployment, which hit 14.7% in April and was expected to remain elevated for months, rose from $3 billion in April 2019 to $49 billion last month. The Small Business Administration paid out $15 billion compared to $87 million last year.

The CBO estimated the deficit for fiscal 2020 will approach $3.7 trillion if no other coronavirus relief is enacted and $2.1 trillion in fiscal 2021.

“The economy will experience a sharp contraction in the second quarter of 2020 stemming from factors related to the pandemic, including the social distancing measures put in place to contain it,” the CBO said. “In the third quarter, economic activity is expected to increase, as concerns about the pandemic diminish and state and local governments ease stay-at-home orders, bans on public gatherings, and other measures restraining economic activity. However, challenges in the economy and the labor market are expected to persist for some time.”

The economy contracted 4.8% in the first quarter, and the second quarter contraction was expected to hit 30%.