The U.S. federal budget deficit will soar to a record US$3.3 trillion this fiscal year, swelling government debt to a size bigger than the economy in the wake of massive spending to cushion Americans from the coronavirus pandemic, according to the Congressional Budget Office’s latest tally.
Debt held by the public will reach US$21.9 trillion in the fiscal year ending September 2021, or the equivalent to 104.4 per cent of gross domestic product, up from 98.2 per cent in the current year, the CBO said Wednesday in updated projections. Debt will increase to US$33.5 trillion at the end of 2030, or 109 per cent of GDP; the previous 10-year projection, in March, saw the figure at 98 per cent in 2030.
Even so, this year’s shortfall is smaller than the non-partisan agency’s preliminary April projection of US$3.7 trillion. In 2019, the gap was US$984 billion. The updated budget estimate, issued Wednesday and which incorporates legislation enacted through Aug. 4, also showed the U.S. deficit will total US$1.8 trillion in fiscal 2021.
The projected deficit for this year would equate to 16 per cent of gross domestic product, up from 4.6 per cent in 2019 and the largest since World War II. U.S. government outlays this fiscal year will jump to US$6.6 trillion, the CBO estimated as lawmakers scrambled to put in place fiscal backstops to preserve jobs and companies after state-ordered shutdowns of non-essential businesses.
The resulting economic recession is also being reflected on the other side of the nation’s fiscal ledger. Revenue is projected to fall to US$3.3 trillion this year from almost US$3.5 trillion in 2019.