U.S. July budget deficit hits $302 billion as spending remains high

FILE PHOTO: U.S. President Joe Biden holds holds onto notes while arriving to speak at an event to tout the $1.9 trillion American Rescue Plan Act law during a visit to the James Cancer Hospital and Solove Research Institute in Columbus, Ohio, U.S., March 23, 2021. REUTERS/Leah Millis/File Photo

WASHINGTON (Reuters) – The U.S. government on Wednesday posted a July budget deficit of $302 billion, a record for that month, as COVID-19 relief spending stayed elevated while receipts returned to a more normal pace after a delayed July tax deadline last year.

The Treasury Department said the July deficit compared to a year-earlier $63 billion budget gap. Receipts for the month totaled $262 billion, down 54% percent from July 2020, while outlays were $564 billion, down 10% from the year-earlier period.

The U.S. deficit for the first 10 months of fiscal 2021 came to $2.540 trillion, down 10% from the year-earlier record of $2.807 trillion.

A U.S. Treasury official said that the smaller year-to-date outlays and deficits reflected some tapering of COVID-19 relief spending, with Labor Department outlays for supplemental unemployment benefits down 8% to $359 billion, and Small Business Administration outlays down 40% to $338 billion.

Meanwhile, revenues reflected the general recovery of the U.S. economy, with year-to-date corporate tax receipts up 61% to $324 billion and non-withheld individual taxes up 35% to $763 billion.

The Treasury official declined to comment when asked whether the July budget results would alter the department’s forecasts on when the federal government would exhaust extraordinary measures to continue borrowing under the statutory debt limit of $28.4 trillion.

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