New CBO Baseline Reaffirms Challenge of Coronavirus Response
For Immediate Release
The Congressional Budget Office (CBO) today released its updated budget projections. Although the new baseline doesn’t incorporate the anticipated economic downturn from the coronavirus (COVID-19) pandemic, the projected trillion-dollar deficits will further challenge lawmakers seeking to craft an effective economic bailout package. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
The attention of the country is rightly focused on how to respond to the unfolding health crisis and certain economic downturn. This is a national emergency that will require significant resources to fight the pandemic and related economic hardships. We encourage our leaders to come together, put partisanship aside, and deploy all necessary resources to help stabilize this crisis.
It is frustrating to see the picture CBO’s latest baseline paints of the hole that we put ourselves in right at the time when we need as much fiscal flexibility as possible. During a period of sustained economic growth, lawmakers literally doubled our budget deficits with unpaid-for spending increases and tax cuts. We wasted valuable fiscal space that could have aided our ability to respond to this pandemic. CBO projects deficits of $1.07 trillion this year and debt to nearly reach the size of the entire economy (98 percent of GDP) by 2030, before the effects of the current crisis.
As we move—hopefully quickly—to provide the support to assist with this crisis, it’s worth keeping in mind why fiscal responsibility matters. Manageable debt during good times puts us in the best possible position to borrow in the times of need.
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