WASHINGTON, D.C. – According to reports, the federal budget deficit in the current fiscal year is expected to hit $2.3 trillion, or 10.3 percent of gross domestic product (GDP). This will cause the government’s debt to exceed the size of the economy in 2021, and that’s not even taking into account President Joe Biden’s proposed $1.3 trillion COVID-19 stimulus plan, the Congressional Budget Office (CBO) says.
While the 2021 $2.3 trillion federal debt is currently lower than what the country experienced in 2020 – when it totaled $3.13 trillion, or 14.9 percent of GDP – it still represents dollar totals higher than before the COVID-19 pandemic hit and will be the second-highest level of debt in United States history.
According to the CBO, amount of the budget shortfall is $448 billion, which is 25 percent larger than their previous forecast. GDP is a comprehensive measure of U.S. economic activity. It measures the value of the final goods and services produced in the United States, and changes in GDP are the most popular indicator of the nation’s overall economic health, according to the Bureau of Economic Analysis.
The large amount of federal debt, said the CBO, can be attributed to costs associated with the government’s efforts to address the effects of the ongoing COVID-19 pandemic, including the $2.2 trillion CARES act in March 2020 and an additional $900 billion package passed in December 2020.
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Obviously, large federal debts will inflate the national debt further; as of now, the public share of the $27.9 trillion national debt is $21.8 trillion, which is over 100 percent of GDP; the CBO says that number could be as high as $35.3 trillion – or 107 percent of GDP – by 2031.