Treasury Shows Record Borrowing
The Department of Treasury released its final Monthly Treasury Statement for fiscal year 2020, showing deficits totaled a record $3.1 trillion and debt breached $21.0 trillion – roughly 102 percent of GDP. This debt figure is higher than CBO’s recent projections of 98 percent, possibly because the Treasury is retaining more cash on hand than expected. Below is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
It’s official, we ended the fiscal year with $21 trillion of debt – which means debt is now larger than a year’s worth of economic output. And this astronomical level of debt is only going to get bigger.
Borrowing to combat the pandemic and economic crisis makes sense. But that’s no excuse for the massive tax cuts and spending increases enacted before the pandemic, nor the failure to control the rising costs of our health and retirement programs once normalcy returns.
The only other time debt has exceeded the size of the economy was at the end of World War II – and we ran years of mostly balanced budgets afterwards to bring it back down. We should be borrowing now, but once the economy recovers, our debt cannot continue to grow faster than the economy forever. It’s disappointing to see both candidates for President proposing trillions of dollars in additional debt instead of plans to save Social Security and Medicare. The deeper we dig this hole, the harder it will be to claw our way out.
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