Deficit and Debt

From the Congressional Budget Office:

CBO projects a federal budget deficit of $3.0 trillion in 2021 as the economic disruption caused by the 2020–2021 coronavirus pandemic and the legislation enacted in response continue to boost the deficit (which was large by historical standards even before the pandemic). At 13.4 percent of gross domestic product (GDP), the deficit in 2021 would be the second largest since 1945, exceeded only by the 14.9 percent shortfall recorded last year.

In CBO’s projections, deficits fall over the next few years as pandemic-related spending wanes. They increase in most years thereafter—boosted by rising interest costs and greater spending for entitlement programs—and reach 5.5 percent of GDP in 2031. (Revenues remain largely stable relative to GDP over the projection period.)

With such deficits, federal debt held by the public totals 103 percent of GDP at the end of 2021 in CBO’s projections. Debt then falls modestly through 2024 and rises thereafter, reaching 106 percent of GDP in 2031—about equal to its previous peak, recorded in 1946.