High levels of federal debt exacerbated by the coronavirus and recently passed relief measures could push public debt past the size of the U.S. economy by Sept. 30 and eclipse a post-World War II record by 2023, the Committee for a Responsible Federal Budget said Monday.
The independent bipartisan public policy organization projects that budget deficits will total more than $3.8 trillion or 18.7% of GDP in the fiscal year ending Sept. 30 and $2.1 trillion, or 9.7% of GDP, next fiscal year. Last year's federal budget deficit was $984 billion.
Federal debt that was slightly under 80% of GDP before the crisis will exceed 100% by Oct. 1, CRFB projects, and keep growing, exceeding by 2023 the prior record of 106% set just after World War II.
The projections do not count the addition debt from future legislation that is expected to address the crisis, or any other tax and spending policy changes. They also assume a strong economic recovery in 2021 and a full return to pre-crisis trends by 2025. A slower and weaker recovery could see debt grow to 117% of GDP by 2025, the organization said.
Committee for a Responsible Federal Budget president Maya MacGuineas said in a recent blog that combating the crisis and preventing an economic depression requires more borrowing now but should be followed by years of fiscal responsibility to get debt and deficits back to more sustainable levels.