The nonpartisan United States Congressional Budget Office on Wednesday said the federal budget deficit for fiscal 2020 will hit $3.3 trillion, 16 percent of gross domestic product (GDP), down from its April 24 preliminary estimate of $3.7 trillion.
Federal deficits were projected to fall to $1.8 trillion in the fiscal year beginning October 1, the CBO said, and will total $13 trillion over 10 years.
So far this year, more than $3 trillion in emergency coronavirus pandemic aid has been enacted into law.
These huge federal outlays have caused a surge in this year’s already large deficit and federal debt.
“This report shows that our unsustainable fiscal challenges have rapidly accelerated, as our national debt will now exceed the size of our entire economy next year,” said Peter G Peterson Foundation Chief Executive Michael Peterson. The group works to increase public awareness of the urgent fiscal challenges facing America’s future.
The CBO’s forecast did not include another round of coronavirus aid Congress might consider, which could exceed $1 trillion.
The $3.3 trillion budget deficit this year, if realized, would be more than triple the shortfall recorded in 2019. And a budget deficit at 16 percent of GDP would be the largest since 1945.
Meanwhile, federal debt held by the public was projected to rise sharply, to 98 percent of GDP in 2020, compared with 79 percent at the end of 2019 and 35 percent in 2007, before the start of the previous recession, the CBO said.
The CBO also sounded alarms over the viability of the Social Security, Medicare, military retirement and other trust funds, predicting they would be depleted within 10 years unless Congress addresses the shortfalls.
“Trust fund deficits are larger than previously projected in part because of economic disruption caused by the pandemic,” the agency said. Growing numbers of beneficiaries was also contributing to the problem.
The Medicare hospital insurance fund for the elderly will run out of money by 2024, the CBO estimated