The massive United States effort to save American families and the economy from the worst of COVID-19 has exacted a historically high price on federal resources.
The U.S. Congressional Budget Office (CBO) on Thursday reported that the federal budget deficit will jump to a record $3.3 trillion this year. Massive trillion-dollar stimulus packages approved by the U.S. Congress are responsible for more than $2 trillion of this massive deficit.
The deficit will also push the total U.S. national debt to 98 percent of U.S. gross domestic product (GDP) by the end of the year. This total compares with 79 percent of GDP at the end of 2019 and 35 percent in 2007.
The CBO estimates the national debt will exceed 100 percent of GDP in 2021 and set a new record high of 107 percent in 2023, which will then be eclipsed by a new record high of 109 percent by 2030.
The fact the national debt will exceed annual GDP in 2021 will hurl the U.S. back to where it was at the end of World War II, when accumulated debt exceeded the size of the economy due to huge war expenditures.
The CBO said the huge economic disruption caused by the pandemic and the enactment of legislation led it to increase its projection of the deficit for 2020 by $2.2 trillion. It also anticipates that if current policies remain the same and no further legislation affecting revenues or spending is enacted, "the deficit in 2020 will total $3.3 trillion rather than the $1.1 trillion it projected in March. Measured relative to the size of the economy, the deficit would total 16.0 percent of gross domestic product (GDP), the largest deficit since 1945."
The CBO projects the deficit will shrink after 2020, and by 2023 will be about the same nominal amount it projected last March. Despite this, CBO said deficits throughout the next decade will be larger as a percentage of GDP than their average over the past 50 years.
