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CBO projects $3.1 trillion federal deficit in FY2020 amid coronavirus pandemic
Are you worried about the deficit during the coronavirus pandemic?
By Eric Revell, Countable News
What’s the story?
- The Congressional Budget Office (CBO) projected that the federal budget deficit was $3.1 trillion in fiscal year 2020, an amount roughly 15.2% of gross domestic product (GDP) which makes it the largest deficit relative to the size of the U.S. economy since 1945. The Treasury Dept. will release the official figure later this month, and the national debt is expected to exceed the size of the economy for the first time since the end of World War II.
- Based on the CBO’s latest estimate, the deficit widened by more than $2.1 trillion as the federal government spent a record-setting $6.5 trillion, including more than $2 trillion in stimulus spending in response to the coronavirus (COVID-19) pandemic. This USAFacts chart shows federal spending, tax revenue, and the deficit or surplus in FY2020 dollars dating back to 1980:
- Federal spending on programs to respond to economic and healthcare needs amid the COVID-19 pandemic escalated after the enactment of the bipartisan CARES Act in March, which authorized over $2 trillion in spending and is the largest of several COVID-19 relief packagesenacted to date.
- This USAFacts chart shows the change in federal spending for a given month from 2019 to 2020, and how federal spending spiked in April 2020 (+$604.5 billion from 2019), May (+$132.8 billion), June (+$762 billion), and July (+$255.4 billion):
How much was the federal government projected to spend before the pandemic?
- Mandatory Spending: The CBO estimated the federal government would have $2.859 trillion in mandatory spending for FY2020, including $1.327 trillion on Medicare, Medicaid, and related programs plus $1.094 trillion on Social Security. An additional $382 billion in net interest costs were projected for servicing the existing national debt. The CBO has previously identified mandatory spending as the main driver of increasing federal deficits despite tax revenues reaching an all-time high in 2019.
- Discretionary Spending: The CBO estimated discretionary spending would total $1.406 trillion in FY2020. Congress enacted legislation to allow all other federal programs to spend a total of $1.371 trillion during FY2020 based on the caps established by the Bipartisan Budget Act of 2019.
- Previous Deficit Projection: The CBO’s initial deficit projection for FY2020 was $1.015 trillion.
(Photo Credit: iStock.com / scaliger)
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