Summary List Placement
The amount of debt held by the US government will soon nearly equal the size of the entire economy, the nonpartisan Congressional Budget Office projected on Wednesday.
It’s set to be the highest level since the end of World War II after the government ramps up its spending to battle the coronavirus pandemic. The agency estimated that the amount of debt the US owes would amount to 98% of its gross domestic product by the end of 2020. Next year, it would surpass the economy’s size.
The CBO also said the deficit this year would reach $US3.3 trillion, an amount three times larger than last year’s figure.
Much of that spending has been fuelled by the federal government’s response to the coronavirus pandemic. Lawmakers in Congress, along with President Donald Trump, have approved over $US3 trillion in federal spending.
The majority of that came from the $US2 trillion Coronavirus Aid, Relief, and Economic Security Act passed in March, which included $US600 added weekly unemployment benefits, $US1,200 direct payments to millions of people, and small-business aid. Those federal-assistance components expired this summer. Further negotiations on another economic relief package remain stalled.
Some experts say the nation’s debt load is unsustainable, though most say the US should spend what it takes to thwart the coronavirus and end the economic crisis stemming from the pandemic.
“In the short term, you have to spend what it takes to minimise the recession and keep the economy afloat,” Brian Riedl, a senior fellow at the right-leaning Manhattan Institute, told The Wall Street Journal. “But the soaring debt to GDP ratio is totally unsustainable, even if interest rates remain low.”
“The numbers I’m more concerned about are the swaths of families unable to pay rent or put food on the table, and Congress should be working to decrease those instead of the deficit,” Elizabeth Pancotti, an economic-policy expert at the left-leaning think tank Employ America, told The Washington Post.
Business Insider Emails & Alerts
Site highlights each day to your inbox.