This document provides additional information about the baseline budget projections that CBO released on February 11, 2021.
In this report, the Congressional Budget Office provides additional information about the baseline budget projections that the agency released on February 11, 2021.
DeficitsCBO projects a federal budget deficit of $2.3 trillion in 2021, nearly $900 billion less than the shortfall recorded in 2020. At 10.3 percent of gross domestic product (GDP), the deficit in 2021 would be the second largest since 1945, exceeded only by the 14.9 percent shortfall recorded last year. Those deficits, which were already projected to be large by historical standards before the onset of the 2020-2021 coronavirus pandemic, have increased significantly as a result of the economic disruption caused by the pandemic and the enactment of legislation in response.
In CBO's projections, annual deficits average $1.2 trillion a year from 2022 to 2031 and exceed their 50-year average of 3.3 percent of GDP in each of those years. They decline to 4.0 percent of GDP or less from 2023 to 2027 before increasing again, reaching 5.7 percent of GDP in 2031. By the end of the period, both primary deficits (which exclude net outlays for interest) and interest outlays are rising.
Federal debt held by the public-which stood at 100 percent of GDP at the end of fiscal year 2020-is projected to reach 102 percent of GDP at the end of 2021, 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.
Federal revenues are projected to generally increase relative to GDP as a result of the expiration of temporary pandemic-related provisions, scheduled increases in taxes, and other factors.
OutlaysProjected outlays decline relative to GDP for the next few years, as pandemic-related spending wanes and low interest rates persist. Outlays then increase relative to GDP, owing to rising interest costs and greater spending for major entitlement programs.
Relative to its estimates from September 2020, CBO's estimate of the deficit for 2021 is now $448 billion (or 25 percent) larger, and its projection of the cumulative deficit between 2021 and 2030 (at $12.6 trillion) is now $345 billion (or 3 percent) smaller. In 2021, the costs of recently enacted legislation are partly offset by the effects of a stronger economy. In subsequent years, the largest changes stem from revisions to the economic forecast. CBO now projects stronger economic activity, higher inflation, and higher interest rates, boosting both revenues and outlays-the former more than the latter.
- Data Underlying Figures and Tables
- The 2021 Long-Term Budget OutlookMarch 4, 2021
- Additional Information About the Economic Outlook: 2021 to 2031February 23, 2021
- The Budget and Economic Outlook: 2021 to 2031February 11, 2021
- An Overview of the Economic Outlook: 2021 to 2031February 1, 2021
- The Effects of Pandemic-Related Legislation on OutputSeptember 18, 2020
- An Update to the Budget Outlook: 2020 to 2030September 2, 2020
- How CBO Prepares Baseline Budget ProjectionsFebruary 5, 2018
- How CBO Produces Its 10-Year Economic Forecast: Working Paper 2018-02February 2, 2018
- GlossaryJuly 19, 2016
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CBO - Congressional Budget Office published this content on 05 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 March 2021 16:20:04 UTC.
