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CBO: U.S. debt to exceed GDP in 2021 for the first time since the end of WWII
Are you worried about the national debt?
By Eric Revell, Countable News
What’s the story?
- The Congressional Budget Office (CBO) on Wednesday released an update to its annual federal budget projections and reported that the U.S. national debt is likely to exceed the size of America’s gross domestic product (GDP) in 2021 for the first time since 1946, when the country was in the midst of the post-World War II demobilization.
- This CBO chart shows historical and projected debt held by the public as a percentage of U.S. GDP. The CBO projects that debt will reach 98% of GDP in 2020 before climbing to 104% in 2021, which will be followed by new records of 107% in 2023 and 109% in 2029. At the end of World War II, federal debt held by the public reached 104% of GDP in 1945 and 106% of GDP in 1946.
- The effects of, and response to, the coronavirus pandemic ― particularly the record-setting federal spending on relief packages and the diminished tax revenues caused by shutdown of portions of the economy ― have widened the FY2020 deficitto a projected $3.3 trillion.
- While the coronavirus response has accelerated the growth of the national debt, the CBO’s projections of rapid growth in the debt pre-date the pandemic. For example, the CBO’s 2016 budget report projected debt to reach 86% of GDP by 2026 and 155% of GDP by 2046, while the 2019 budget report forecasted that debt would be 93% of GDP in 2029 and 150% of GDP in 2049.
- The long-term growth in the debt that the CBO has been projecting for years is largely attributable to growth in spending on entitlement programs for the elderly (Medicare and Social Security) plus the rising cost of servicing the national debt.
(Photo Credit: iStock.com / BackyardProduction)
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