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US Public Debt to Exceed 100% of GDP by End of 2020 - Non-Government Watchdog

© AP Photo / David BeckerA billboard displaying the U.S. national debt is displayed along the Las Vegas Strip, Wednesday, March 18, 2020
A billboard displaying the U.S. national debt is displayed along the Las Vegas Strip, Wednesday, March 18, 2020 - Sputnik International
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The White House previously passed a $2 trillion relief package designed to help businesses and ordinary citizens overcome their difficulties, including economic ones, created by the coronavirus pandemic, which has infected over 554,000 people in the country by 13 April.

American non-state, non-profit watchdog the Committee for a Responsible Federal Budget (CRFB) has drafted a report projecting that US public debt will exceed the country's GDP in 2020. According to the CRFB, the recent $2 trillion relief bill, passed by the Congress and signed by Trump, led to the US budget deficit skyrocketing to $3.8 trillion, or 18.7% of the country's total projected GDP in 2020. The watchdog projects that the budget deficit will fall to $2.1 trillion, or 9.7% of GDP, by the end of next year.

The CRFB noted in its report, however, that the projections are based on a scenario that no more relief bills will be passed and no changes to the tax system are made, along with the assumption that the American economy will quickly recover from the pandemic.

"These projections almost certainly underestimate deficits, since they assume no further legislation is enacted to address the crisis and that policymakers stick to current law when it comes to other tax and spending policies. The projections also assume the economy experiences a strong recovery in 2021", the watchdog suggested.

If either of the conditions is not met, then the public debt could continue to grow, reaching some 117% of the country's economy by the end of 2025. However, the CRFB assumes that the American economy will have fully recovered and returned "to its pre-crisis trajectory" by that time.

Grief holds her covered face against the shoulder of History and weeps in mourning as depicted at the Peace Monument in front of the U.S. Capitol in Washington, U.S., March 23, 2020.  The U.S. Senate struggled to reach agreement on a far-reaching coronavirus stimulus package on Monday. - Sputnik International
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The watchdog stressed in its report that the borrowings that were undertaken by the Trump administration and are expected to cause the US public debt to soar were "both inevitable and necessary in light of the current pandemic". CRFB President Maya MacGuineas noted that these funds are required to not only save lives, but also to save the American economy.

"Combating this public health crisis and preventing the economy from falling into a depression will require a tremendous amount of resources – and if ever there were a time to borrow those resources from the future, it is now", MacGuineas said.
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