Debt is expected to reach 98% of Gross Domestic Product this year, then exceed 100% of GDP in 2021 before rising to 107% in 2023
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The US public debt will exceed the size of the economy in fiscal year 2021, Congressional Budget Services (CBO) said on Wednesday, also pointing to a record budget deficit.
Debt is expected to reach 98% of gross domestic product this year, then exceed 100% of GDP in 2021 before rising to 107% in 2023, “the highest level in the country’s history,” they said in a statement.
The CBO also expects a budget deficit of 3.3 trillion dollars in 2020, “more than triple the deficit recorded in 2019, mainly due to the economic disruption caused by the coronavirus pandemic” which required a gigantic aid plan to support the economy.
In March, Congress urgently passed a law, the Cares Act, to unblock 2.2 trillion dollars in aid for families and businesses hit hard by the health and economic crisis.
A second aid plan of nearly 500 billion dollars had completed it at the end of April.
Democrats and Republicans agree on the need to vote on another aid plan, but they are stuck on the amount.
In recent weeks, growing indebtedness has emerged at the center of a debate in Congress over how much additional assistance the government can afford to provide to households and businesses affected by the pandemic.
Reducing the amount of the nation’s debt, however, had not been a priority for Democratic lawmakers or their Republican counterparts in recent years.
This had also facilitated the support of the two parties for the first plans to help the economy in the spring, in the heart of the pandemic.
But now the talks are deadlocked: Democrats are pushing for a minimum $ 2.2 trillion relief package when the White House wants it to cap at $ 1,000 billion.
In January, the CBO had itself warned against exponential debt.
Although the cost of debt is contained thanks to very low interest rates, it represents an increasingly important part of the deficit, thus becoming an ever heavier burden left on future generations.
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