The Congressional Budget Office is out with a fresh report projecting that deficits will remain at a sustained level not seen since “at least 1930” even after coming down from their Covid-era peak.
President Biden likes to claim that he brought down deficits, but what really happened is that during the Covid era, the federal government responded with $6 trillion in deficit spending, and those elevated spending levels are not being replicated every year. But even though the CBO does not expect deficits to reach the extraordinary $3 trillion level achieved during the pandemic, it expects them to exceed $1 trillion in every year but one (in 2023, the projection is just shy at $984 billion). Over the next decade, CBO expects deficits to average $1.6 trillion and approach $2.3 trillion annually by 2032.
CBO provides some historical perspective:
Deficits average 5.1 percent of gross domestic product (GDP) over that period, and in 2032, the deficit equals 6.1 percent of GDP. By comparison, over the past 50 years, the annual deficit has averaged 3.5 percent of GDP. From 2025 through 2032, projected annual deficits exceed 4.5 percent of GDP. At no time since at least 1930 have deficits remained that large for longer than five years.
This doesn’t mean that there was a period of higher deficits before 1930, just that this is where comparable data become available.
In terms of the cumulative debt, CBO sees it hovering around 100 percent of GDP every year, and then eclipsing the World War II record by the end of the decade.