Today I spoke about CBO’s latest 10-year budget projections at an event hosted by the U.S. Chamber of Commerce’s Chief Economists Committee. The projections are based on economic projections that CBO released in July, and they incorporate legislation enacted through August 4.
CBO projects that if current laws generally did not change, the federal budget deficit would be $3.3 trillion in 2020, more than triple the shortfall recorded in 2019. That increase is mostly the result of the economic disruption caused by the 2020 coronavirus pandemic and the enactment of legislation in response. The 2020 deficit would equal 16.0 percent of gross domestic product (GDP), the largest percentage since 1945. In CBO’s projections, the average deficit over the 2021–2030 period is 2 percentage points larger than the 3 percent of GDP that annual deficits have averaged over the past 50 years.
Federal debt held by the public is projected to rise sharply, to 98 percent of GDP in 2020. It would exceed 100 percent in 2021 and increase to 107 percent in 2023, the highest percentage in the nation’s history.
CBO’s estimate of the deficit for 2020 is now $2.2 trillion more than projected in March, mostly because of recently enacted legislation. CBO now projects a cumulative deficit over the 2021–2030 period of $13.0 trillion—$0.1 trillion less than projected in March. That 10-year decrease is the net result of changes that go in opposite directions. Lower projected wages, salaries, and corporate profits, as well as recent legislation and other changes, increase deficits, but lower projected interest rates and inflation reduce them.
Phillip L. Swagel is CBO’s Director.