The United States government is to borrow $3 trillion this year to meet its obligations according to the Congressional Budget Office (CBO).
That’s almost as much as their entire revenue from tax intakes, with it increased by another $745 billion from this February’s projections due to the American Rescue Plan Act of 2021.
The government is to continue borrowing more than $1 trillion a year, CBO says, with it averaging $1.2 trillion from 2022 to 2031, or $12 trillion in total.
CBO said public debt currently amounts to $21 trillion, increasing to $24 trillion at the end of 2021, with it using a very restrictive measure as data by the Treasury puts government debt at above $28 trillion.
Even with this restrictive measure, government debt will reach 103% of GDP at the end of 2021, which is “about the same as the amount recorded in 1946.”
Interest payments on this massive debt are projected to go down because interest rates are close to zero, but by the end of the decade the government will be paying $1 trillion in interest alone.
They also expect the economy to rise by 7.4% this year, or $1.4 trillion, and then increase by 2.8% a year until 2025.
So overall the debt and gross domestic production will grow in tandem, until 2027 when debt is to start growing faster than gross domestic production.
That situation would be effective insolvency with these projections based on current laws, taxes and spending, all of which can change.
In highlighting just has fast debt has grown, CBO says it stood at only 37% of the GDP in 2007, with it estimated to reach 106% by the end of the decade if the estimated level of growth pans out and interest rates remain low.