The nonpartisan Congressional Budget Office (CBO) on Tuesday released an update to its 10-year budget outlook that found the federal budget deficit will approach $2 trillion in the current fiscal year.
The CBO’s latest estimate projects the budget deficit will reach $1.9 trillion in fiscal 2024, which would be the third largest in U.S. history and $200 billion larger than last year’s deficit. The projected $1.9 trillion deficit would trail only the $3.1 trillion fiscal 2020 deficit and the $2.7 trillion fiscal 2021 deficit that were incurred during the peak of spending on pandemic-era relief programs.
Annual budget deficits are expected to surge in the years ahead, surpassing the $2 trillion threshold with a projected deficit of nearly $2.2 trillion in 2030. Deficits would continue to rise in the following years, topping $2.8 trillion in 2033 and 2034 in the CBO’s analysis.
The CBO projected that the debt held by the public relative to gross domestic product (GDP) – a metric used by economists to gauge the size of the national debt relative to the economy – would rise to 99% of GDP this year. That means the national debt held by the public would be essentially the same size as the U.S. economy.
The debt held by the public is projected to rise from nearly $28.2 trillion this year to more than $50.6 trillion in 2034, according to the CBO’s projections.
That would push the share of debt held by the public to 122% of GDP a decade from now, according to the estimate. It would also set a new record for the highest public debt as a percentage of GDP, which currently stands at 106% of GDP in 1946 when the U.S. was demobilizing after the conclusion of World War II – a threshold the CBO projects the U.S. will exceed in 2027.
For comparison, the gross national debt, which consists of both the debt held by the public and Treasury securities held by government accounts like the Social Security trust funds, would reach $35 trillion by the end of fiscal 2024 and soar to $56.9 trillion in fiscal 2034, per the CBO’s projection.