The U.S. budget deficit will be larger than expected because of the $900 billion stimulus bill passed in December, a whopping $448 billion larger than was projected in September, the Congressional Budget Office said Thursday.
According to Breitbart, the CBO forecasts that the federal government will borrow $2.26 trillion this year making it the second-largest deficit since World War II. Last year’s $3.1 trillion was the biggest in absolute numbers and also the largest as a share of gross domestic product.
“The figures do not take into account the $1.9 trillion spending plan the Biden administration has introduced. If passed, that would likely mean the 2021 budget deficit was even larger than last year’s,” as reported by Brietbart.
The CBO estimated that federal debt held by the public, that is, the sum of past deficits, reached 100% of GDP at the end of fiscal year 2020, and will climb to 102 percent of GDP by the end of this year, dip slightly for a few years, and then rise further. “By 2031, debt would equal 107 percent of GDP, the highest in the nation’s history,” as per the report.
“The CBO projects GDP will grow by 3.7 percent in 2021, returning to its pre-pandemic level by the middle of the year, and afterward will grow an average of 2.6 percent over the following four years. After that the CBO forecasts GDP growth to averages 1.6 percent.,” Brietbart reports.
The Federal Reserve sees the economy growing much faster. At its December meeting, the median growth projection was 4.2 for 2021 and 3.2 next year. The median projection for the long-run average is 1.8 percent.