U.S. Debt Now Projected To Be Larger Than U.S. Economy
The Congressional Budget Office estimated on Thursday that the U.S. deficit hit $3.13 trillion for fiscal year 2020, which CNN noted would mean the federal debt has grown larger than the U.S. economy.
The reason for the huge year-over-year jump is simple: Starting this spring, the federal government spent more than $4 trillion to help stem the economic pain to workers and businesses caused by sudden and widespread business shutdowns. And most people agree more money will need to be spent until the White House manages to get the Covid-19 crisis under control.
The Treasury Department won't put out final numbers for fiscal year 2020 until later this month. But if the CBO's estimates are on the mark, the country's total debt owed to investors -- which is essentially the sum of annual deficits that have accrued over the years -- will have outpaced the size of the economy, coming in at nearly 102% of GDP, according to calculations from the Committee for a Responsible Federal Budget.
CNN reported that the federal debt has not been this high “since 1946, when the federal debt was 106.1% of GDP.”
Given the risks of future disruptions, like a pandemic, a debt load that already is outpacing economic growth puts the country at greater risk of a fiscal crisis, which in turn would require sharp cuts to the services and benefits on which Americans rely.