A Grim Look At The Exploding US Budget Deficit

The non-partisan Congressional Budget Office paints a sorry picture of US government spending.

Debt Will Be Double the Size of the Economy by 2051 

The CBO estimates Debt Will Be Double the Size of the Economy by 2051 

CBO estimates that federal debt held by the public will reach double the size of the economy, rising from 79 percent of Gross Domestic Product (GDP) at the end of 2019 and 100 percent of GDP at the end of Fiscal Year (FY) 2020 to 202 percent of GDP by 2051. Projected debt in 2051 will be over 4.5 times the 50-year average of 44 percent of GDP and will be on track to double the previous record of 106 percent of GDP a few years later. In nominal dollars, debt will grow from $28 trillion today to over $133 trillion by 2051. 

Actual debt levels could be higher than CBO projects. Under an alternative scenario that assumes lawmakers enact an additional $2 trillion of fiscal support in response to COVID-19 (similar to the American Rescue Plan), extend most expiring tax cuts, and grow annual appropriations with the economy instead of inflation, debt would total 259 percent of GDP by 2051.

Budget Deficits

federal budget deficits 2003-2051

Budget deficits had already risen before the pandemic from 2.4 percent of GDP ($442 billion) in 2015 to 4.6 percent of GDP ($984 billion) in 2019 and set a new record of 14.9 percent of GDP ($3.1 trillion) last year due to the crisis. CBO expects the deficit to fall to $2.3 trillion this year and hit a low of $905 billion in 2024 before resuming its upward trajectory. The deficit is projected to total 5.7 percent of GDP ($1.9 trillion) in 2031, 9.4 percent of GDP ($4.4 trillion) in 2041, and 13.3 percent of GDP ($8.8 trillion) in 2051. 

Rosy Scenario

Those projections constitute rosy scenarios. 

Why?

They do not factor in recessions. The prior budget projections did not factor in Covid, the Great Recession, or the DotCom bust.

The CBO does not see and has not factored the next recession into any of these scenarios.

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