Washington, DC – Today’s Congressional Budget Office 10-year outlook provides a sober reminder of the fiscal challenge that awaits policymakers in the wake of COVID-19 and its economic fallout. CBO now confirms that debt held by the public matched U.S. gross domestic product at the end of the past fiscal year, more than a decade earlier than its pre-crisis projection. CBO’s report anticipates that debt held by the public will reach $35.3 trillion or 107% of GDP in 2031. If enacted, the pending COVID relief package will push those numbers significantly higher.
The following is a statement from Shai Akabas, economic policy director at the Bipartisan Policy Center:
“In this moment, we cannot take our eye off the ball—additional relief to combat COVID-19 must remain the priority. There is no way to realistically improve our economic and fiscal outlooks until we have controlled the virus and reversed this current economic downturn.
“When it comes to recovery, the country faces many challenges that are likely to require an infusion of federal resources. But it is crucial that lawmakers balance any new investment with a commitment to stabilizing the precarious fiscal picture that CBO highlighted today. In this realm, ‘wait and see’ is not a strategy—it is a fiscal risk.
“Later this year, several deadlines will force further budgetary action. The debt limit will be reinstated on August 1 with very little time thereafter to address it, according to BPC’s latest projection. Further, the appropriation caps on domestic and defense spending expire this year, and Congress will need to reach a bipartisan agreement that sets the course for these programs in the years ahead.
“Relief packages are paramount, but they should be timely, targeted, and temporary. Once the crisis passes and the economy regains its footing, lawmakers must turn their attention to America’s soaring budget deficits.”
Shai Akabas is available for interview.