The Congressional Budget Office on Wednesday projected that the federal deficit for the current fiscal year will be $3.3 trillion, more than triple the shortfall recorded in fiscal year 2019.
The anticipated deficit would be 16% of gross domestic product, the largest since 1945, when the nation financed World War II.
Much of the red ink this year has been caused by the federal response to the coronavirus pandemic.
Nearly $4 trillion has been allocated to combat the effects of the virus, according to the nonpartisan Committee for a Responsible Federal Budget.
The federal debt held by the public is projected to exceed 100% of the gross domestic product in 2021 and surge to 107% in 2023, which would be the highest in the nation’s history, according to the CBO.
Michael A. Peterson, CEO of the Peter G. Peterson Foundation, said that the already deteriorating fiscal situation facing the federal government has been accelerated by its response to the pandemic.
“This report shows that our unsustainable fiscal challenges have rapidly accelerated, as our national debt will now exceed the size of our entire economy next year,” he said.
By 2030, the debt would equal 109% of GDP, according to the CBO.
Spending is projected to be 50% higher in fiscal year 2020 than it was in fiscal year 2019. Outlays are expected to equal 32% of GDP this fiscal year, the highest since 1945.
Meanwhile, the amount of revenue collected by the federal government is projected to fall in 2021 because of the economic disruption caused by the pandemic. Millions of workers have lost their jobs, which hurt the tax base.
Revenues are expected to increase beginning in fiscal year 2025, but that is largely based on Congress not extending tax cuts that have already been enacted into law and are scheduled to expire that year. Lawmakers have a history of extending tax breaks right before they expire.
