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The federal budget deficit will reach $3.3 trillion in the fiscal year ending this month — more than triple the 2019 shortfall, the nonpartisan Congressional Budget Office (CBO) projected on Wednesday.
Why it matters: That would be 16% of GDP, the largest amount since the end of World War II in 1945. The national debt is projected to exceed 100% of GDP in 2021 and rise to 107% in 2023 — "the highest in the nation's history," the CBO notes.
Driving the news: The CBO attributed the rise mostly to the economic disruption caused by the coronavirus pandemic "and the enactment of legislation in response."
- Federal spending has jumped to 32% of GDP this fiscal year after Congress spent trillions of dollars in coronavirus relief.
- Negotiations for the next stimulus package have continued to stall, as tens of thousands of Americans remain without a job.
Our thought bubble, via Axios' Felix Salmon: The U.S. government can borrow at less than the rate of inflation, which is a sign from the markets that they’re encouraging higher government spending, higher borrowing and higher debt.
- The Treasury will always be able to repay that debt, because it borrows in dollars and can print as many of those as it likes.
Of note: The deficit could have been worse. The CBO projected in April that it would jump to $3.7 trillion.