The Congressional Budget Office projected early last month that the federal debt held by the public would approach the size of the economy in a decade, rising from just over 80% of gross domestic product this year to 98% in 2030. Then the coronavirus pandemic led to much of the economy being shuttered and Congress passed its $2.2 trillion relief package. The Committee for a Responsible Federal Budget now projects that, as a result of those developments, debt held by the public will now exceed GDP by the end of this fiscal year. By 2023, the debt will top the record 106% of GDP set after World War II.
CRFB says the budget deficit will rise from about $1 trillion last year to $3.8 trillion (nearly 19% of GDP) this year and $2.1 trillion (about 10% of GDP) in 2021 — and the group adds that those projections “almost certainly underestimate” the deficit totals since they assume Congress doesn’t enact additional coronavirus aid or change current tax and spending laws. If the economy doesn’t recover strongly next year or bounce back fully within a few years, the budget watchdogs project that debt would climb to 117% of GDP by 2025.
Those numbers shouldn’t cast the federal response into question, though. “Like the record levels of borrowing undertaken during World War II, a large share of today's massive deficits are both inevitable and necessary in light of the current pandemic crisis,” the group says. But it warns that eventually, “such high and rising deficits and debt levels will prove unsustainable, and corrective action will be needed.”