CBO’s Post-COVID Budget Baseline Reveals Magnitude of Future Fiscal Challenge
For Immediate Release
The Congressional Budget Office (CBO) released its first post-COVID Budget and Economic Outlook for the next decade this afternoon. In its latest projections, CBO estimates debt will exceed the size of the economy next year and reach a new record of 107 percent of GDP by 2023. CBO projects debt will continue to grow to 109 percent of GDP by 2030.
CBO projects deficits will total $3.3 trillion in 2020 and $13 trillion over the subsequent decade. You can read more in our summary blog here.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
CBO’s latest debt projections are saddening in what they represent and truly eye-popping in what they mean for the future.
This pandemic is tragic on so many fronts and today’s massive borrowing is a cost of mitigating this pain. The warning bells this report contains should not cause a premature end to borrowing, but a commitment to dealing with the debt at the appropriate time.
This level of borrowing would have been unimaginable a few months ago and it is unsustainable over the long-term. Today’s report provides the clearest evidence yet of the fiscal challenges that lawmakers will ultimately have to tackle.
There was no excuse for entering this crisis with trillion-dollar annual deficits, nor continuing that level of borrowing once the pandemic ends and the economy normalizes.
While managing the COVID-19 crisis must remain the top priority, whomever is sworn in as president next year will also need a plan to dig us out of this hole once the economy is stronger.
The last time we borrowed this much, just after World War II, the country ran over a decade of roughly balanced budgets to get us back on the right path. Today, we face rising health and retirement costs and have no plan to even avoid the looming insolvency of Social Security and Medicare.
Without new taxes and spending reforms, CBO estimates we’ll borrow $12.6 trillion more over the next decade, lifting debt to $33.5 trillion. In this truly unprecedented situation, we can no longer risk sitting back and doing nothing.