© Reuters. FILE PHOTO: Coronavirus disease (COVID-19) outbreak in New York City
WASHINGTON (Reuters) – The Congressional Budget Office on Thursday estimated that the U.S. budget deficit in fiscal year 2021 would decrease from $ 3.132 trillion a year ago to $ 2.258 trillion. However, the projections exclude the $ 1.9 trillion stimulus plan proposed by President Joe Biden.
The CBO, which released its 10-year budget outlook, said deficits would shrink to $ 905 billion by fiscal year 2024, based on current spending and tax laws that went into effect Jan. 12, thereafter, however, it would rise steadily to 1.9 trillion US dollars by fiscal year 2031, part of the rising interest costs due to a growing debt burden.
The non-partisan budget arbitration agency did not estimate the tax costs of Biden’s COVID-19 relief plan, which is steadily advancing through congressional committees. Some parts of the bill are still ongoing.
However, the package is expected to add to U.S. deficits and debt, as it did in fiscal 2020, which ended Sept. 30, totaling around $ 4 trillion in coronavirus spending. A round of $ 900 billion in coronavirus incentives passed in late December is driving fiscal year 2021 estimates into deficits. It restored the improved unemployment benefits and sent $ 600 direct payments to many Americans.
But the spending has also boosted economic growth and revenue somewhat, the CBO said. More spending will likely do the same.
The CBO estimated last week that US economic growth would rebound to 4.6% in 2021 after GDP contracted 3.5% in 2020 – again without any impact from Biden’s stimulus package, which the Democrats with budgetary procedures want to pass that allow a threshold of 51 votes in the Senate.
CBO said fiscal 2021 revenue, based on applicable laws, would increase from $ 3.420 trillion last year to $ 3.506 trillion, while spending would increase from $ 6.552 trillion last year to $ 5.764 trillion would sink.
The agency said its baseline estimates show that U.S. national debt reached $ 21.019 trillion, or 102.3% of GDP, in fiscal 2021. Assuming no legislative changes were made, debt would decrease to 100.9% in FY 2026, but steadily increase to 107.2% of GDP in FY 2031.
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