Annual U.S. federal budget deficits – the difference between what the government takes in and what it spends each year – are expected to remain close to $1 trillion or more over the next 10 years, the Congressional Budget Office said Thursday.
Congress’ nonpartisan budget arm reported that fiscal deficit was expected to fall this year, from $3.13 trillion in 2020 to $2.26 trillion in 2021, and continue a path downward until 2024, but after that, it would begin rising again and hit almost $2 trillion in 2031.
The forecasts are likely overly optimistic, as they are based on current law and do not take into account plans by Democrats in Congress to pass a $1.9 trillion coronavirus economic aid package in the coming weeks. The CBO’s forecast also assumes temporary tax cuts put into place in 2017 by Republicans will not expire as scheduled.
The 2020 and 2021 deficits will be the largest and second largest deficits in dollar terms, and the some of the largest deficits in relation to the size of the economy since the end of World War II.
“Those deficits, which were already projected to be large by historical standards before the onset of the 2020-2021 coronavirus pandemic, have widened significantly as a result of the economic disruption caused by the pandemic and the enactment of legislation in response,” CBO said.