United States government debt to pass 100 per cent of GDP in 2021

Driven by the massive fiscal response to the COVID-19 pandemic, USA federal debt is projected to exceed the size of the economy for the fiscal year 2021, the highest level since World War II, the Congressional Budget Office (CBO) said Wednesday.

The Congressional Budget Office published its latest report on federal deficits and debt on Wednesday.

"This report shows that our unsustainable fiscal challenges have rapidly accelerated, as our national debt will now exceed the size of our entire economy next year", said Peter G Peterson Foundation Chief Executive Michael Peterson.

The nonpartisan CBO said its updated forecasts project that by 2030, the debt would equal 109 per cent of GDP.

"Trust fund deficits are larger than previously projected in part because of economic disruption caused by the pandemic", the agency said. The updated budget estimate, issued Wednesday and which incorporates legislation enacted through August 4, also showed the US deficit will total $1.8 trillion in fiscal 2021.

The $2.2 trillion increase over March estimates was largely attributed to legislation passed in response to the pandemic. In CBO's projection, annual deficits relative to the size of the economy generally continue to decline through 2027 before increasing again in the last few years of the projection period, reaching 5.3 percent of GDP in 2030.

More news: Joe Biden's team brings official campaign signs to 'Animal Crossing'

So far this year, more than $3tn in emergency coronavirus pandemic aid has been enacted into law.

These huge federal outlays have caused a surge in this year's already large deficit and federal debt.

Deep disagreements among lawmakers have slowed work on that measure.

Meanwhile, federal outlays are projected to equal 32 percent of GDP in 2020, which is about 50 percent above what they were previous year and the highest percentage since 1945.

The deficit in 2021 is projected to be 8.6 percent of GDP, according to the report.

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