In its “An Update to the Budget Outlook: 2020 to 2030” report, the CBO projects a federal budget deficit of US$3.3 trillion in FY 2020, which ends on Sept. 30, more than triple the shortfall recorded in 2019.
"That increase is mostly the result of the economic disruption caused by the coronavirus pandemic and the enactment of legislation in response," the CBO said, noting that budget deficit will reach 16 percent of gross domestic product (GDP) in 2020, the largest since 1945.
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.
Government spending surged in recent months, as Congress has already approved roughly US$3 trillion since March to cushion the economic impact of the pandemic. That, coupled with a plunge in tax revenue, caused federal deficits to soar and pushed up federal debt.
The CBO report showed that federal debt is projected to rise sharply to 98 percent of GDP in 2020, compared with 79 percent at the end of 2019.
It would exceed 100 percent in 2021 and increase to 107 percent in 2023, the highest in the nation's history, the report said. By 2030, debt would equal 109 percent of GDP. The previous peak occurred in 1946 following the large deficits incurred during World War II.
Against the backdrop of a ballooning debt level, U.S. lawmakers are still under immense pressure to craft a new fiscal relief package but remain in a deadlock over the size and scope of the package, which could again hit the trillion-dollar level.
Democrats have pushed for a US$3 trillion relief package, while the White House and Senate Republicans have proposed a US$1 trillion package.