#191 Federal Budget Forecast - October 2020

SOURCE: https://www.cbo.gov/publication/56517

The budget deficit will reach a record $3.3 trillion (16 percent of GDP) in Fiscal Year (FY) 2020 and total $13 trillion over the subsequent decade. 

Deficits through 2030 will be $2.1 trillion higher than estimated prior to the pandemic and debt-to-GDP will be 11 percentage points higher. 

The current crisis will substantially depress revenue and increase spending in the near-term. 

All major trust funds will exhaust their reserves in the next 11 years. CBO projects Highway Trust Fund (HTF) insolvency by 2021, Medicare Hospital Insurance (HI) insolvency by 2024, Social Security Disability Insurance (SSDI) insolvency by 2026, and the Social Security retirement program by 2031.

Debt could grow even higher than projected. If policymakers enact $1 trillion of additional fiscal relief, extend expiring tax provisions, and increase appropriations with the economy, debt will reach 121 percent of GDP by 2030.

Summary:

Congressional Budget Office newest figures show that our long-term course is unsustainable, and much worse than before. Once the current crisis ends, policymakers must turn their attention to long-term deficit reduction to put the country on solid fiscal ground.  However, that is unlikely to happen