The Congressional Budget Office published its September monthly budget review today, which estimates deficits totaled a record $3.1 trillion in fiscal year 2020 – more than twice the previous record. Based on Treasury data, debt also appears to have breached the size of the economy, totaling nearly 102 percent of GDP at the end of the fiscal year. This is higher than CBO’s previous projections, possibly because the Treasury is retaining more cash on hand than expected.
Below is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
It is hard to believe we now owe a full year’s worth of output. We weren’t supposed to cross this threshold for over a decade, but here we are. Debt is the size of the economy today, and soon it will be larger than any time in history.
Last year’s $3.1 trillion deficit is largely due to the COVID response, but we can’t blame the pandemic for most of this massive debt load. Lawmakers spent the last five years approving unpaid for tax cuts and spending hikes during the expansion, rather than getting our fiscal house in order, securing our trust funds, and prepping for an emergency where borrowing would be justified.
Of course, we shouldn’t try to dramatically reduce today’s deficits in the midst of this emergency – the focus for now must be on combating the pandemic and supporting the economy. But separate from COVID relief, both candidates for President have plans that would add $5 trillion more to the debt over a decade, on top of the $13 trillion of deficits we’re already projected to run. That’s exactly the opposite of what the country needs.
Instead, we need both sides to come together and start planning how they will make the tough decisions needed to save Social Security and Medicare and stop our massive debt from spiraling out of control once the crisis is over and the economy has recovered.