The federal government will shatter the record for spending and deficits this year, ending at $3.3 trillion in the hole, the Congressional Budget Office said Wednesday, painting a grim picture of Uncle Sam’s finances.
Powered by generous aid to combat the COVID-19 pandemic, federal spending will roughly equal a third the size of the U.S. economy. Combined with state and local spending, that puts the U.S. on par with some of Northern Europe’s most expansionist governments in terms of public spending.
“The pandemic and legislation enacted in response to it have caused the deficit to surge in the past few months,” CBO said in the new update.
CBO predicted spending will snap back to its pre-pandemic trend line within a few years, but some lasting damage will be done. Federal debt held by the public, which will reach nearly 100% of gross domestic product by the end of this year, and will cross that ignominious threshold next year.
And by 2023 debt will set all-time records, topping even the levels seen in the aftermath of World War II.
By the end of this decade, debt will have doubled from less than $15 trillion in 2019 to more than $31 trillion in 2030.
All told, federal spending this year will reach $6.6 trillion. That’s $2.2 trillion more than last year.
On the other side of the ledger, revenue will drop about 5%, or $167 billion, as individuals and companies see their incomes — and therefore their tax bills — cut.
