U.S. Debt Level Set to Hit Worrying Milestone Next Year
September 2, 2020
In the wake of the pandemic, stimulus spending and shrinking tax revenue have supercharged the level of government debt. Debt has already reached the highest level relative to the size of the economy since World War II, and next year is projected to be even worse.
The Congressional Budget Office has announced that federal debt is expected to reach or exceed 100% of the nation’s total GDP in the next fiscal year, which begins October 1. This would put America alongside nations like Japan and Italy whose debt load is larger than their economies.
The good news, so far, is that the debt load is not impeding the government’s ability to keep borrowing. Investors have flocked to the safety of U.S. Treasuries. Still, the already massive debt load is sure to be a key point of contention once Congress resumes negotiations over another round of stimulus spending and may impact the ultimate size of the spending package.