A $900 billion swing from April 2019 to April 2020

While the implosion shown in the US jobs report got the (deserved) big headlines for Friday, we got another report that gives a good illustration of how different things look since COVID-19 broke out. And it was the monthly fiscal report by the Congressional Budget Office for April, which featured this graphic that shows how our deficit that was in line with 2019's, until last month changed everything.

Change in US budget balance, Apr 2019 vs Apr 2020
Apr 2019 +$160 billion
Apr 2020 -$737 billion

April is a month where the US generally runs a surplus because of the tax-filing deadline, but since the Trump Administration pushed off the tax filing deadline to July (or later?), that influx of payments didn't happen last month. In our case, we're sure not paying the $3,000+ we owe due to the GOP Tax Scam until we absolutely have to.

As you dig into the budget report, you can also see where the mass layoffs that we had in this country last month are starting to bite the government's bottom line. The CBO indicates that the deferred filing deadline had an effect of cutting $268 billion in revenues compared to April 2019 (both in non-payments from people and corporations of tax due, and in some refunds that haven't been sent in yet). But there also declines in the amount of taxes coming in off of people's paychecks.

Amounts withheld from workers’ paychecks decreased by $31 billion (or 15 percent), as a result of a decline in wages and recently enacted legislation. The CARES Act allows most employers to defer payment of their portion of the Social Security payroll tax and certain Railroad Retirement taxes on wages paid from March 27, 2020, through December 31, 2020.In addition, FFCRA provides refundable credits against payroll taxes to compensate employers for paid sick leave and family and medical leave, and the CARES Act provides a refundable credit against payroll taxes for employee retention.

But the revenue side is still less than $300 billion of that $900 billion difference between 2019 and 2020. The rest falls under spending...kind of.

The largest jump in "spending" is in the form of the stay afloat stimulus checks sent out by Uncle Sam, which technically is a 2020 tax credit vs a tax "cut".

Payments for refundable tax credits were $221 billion—24 times the amounts of such outlays in April 2019. That increase was driven primarily by the recovery rebates, which began to be paid in April.

Much of the other increases in spending came to stabilize individuals and businesses as they dealt with the massive job loss and increased medical services that were required from COVID-19's breakout.

Medicare outlays almost tripled, to $152 billion, largely because of the recent expansion of two programs. First, the CARES Act expanded the Medicare hospital accelerated payment program for Medicare Part A providers during the public health emergency. Second, the Centers for Medicare & Medicaid Services (CMS) expanded the Advance Payment Program to Part B suppliers via regulation; during the month of April, CMS began making those payments. Both programs provide advance payments of Medicare claims that will be recouped from claims over the next year. CBO does not expect the full amount to be recovered during the current fiscal year.

Outlays for the Coronavirus Relief Fund, authorized by the CARES Act to provide grants to state, local, tribal, and territorial governments to offset expenses stemming from the coronavirus pandemic, totaled $142 billion in April.

Outlays for unemployment compensation increased from $3 billion in April 2019 to$49 billion this year. More than half of that increase—$27 billion—stems from a $600 weekly increase in unemployment benefits provided by the CARES Act. Benefits for regular unemployment compensation rose as well.

The CBO also noted increased expenses from CARES-related provisions such as the first $40 billion to health care providers suffering from a lack of everyday patients in the time of COVID-19, the first $15 billion that the SBA handed out in the much-maligned PPP program, and $12 billion to help airlines make their payrolls for April. These programs are likely to spend much more in May, as they are expanded, more aid applications come in and the money gets freed up.

Medicaid also started to show its first post-COVID effects, as spending in that program was up $19 billion (+8.3% vs April 2019), which partially reflects the higher matching percentages that were part of the CARES Act (to take some pressure off of states), and also reflecting the increase in enrollment that the layoffs and pay reductions are starting to have (Wisconsin had its Medicaid enrollment jump by more 43,000 last month, for example).

Given that we still are seeing millions of new filers for unemployment through the 2nd week of May, there is little indication that those spending increases and revenue declines are going to slow down for the next month, which means the record deficits will continue.

But hey, as long as the 10-year note stays below 0.7% and the stock market Bubbles some of its Q1 losses back, what do we have to worry about, right? Well, other than tens of millions of people losing jobs and incomes and not spending at stores, of course. But those aren't "regular folks", so their dire situations won't affect us, right Chief Justice Roggensack?