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February 22, 2021

CBO releases updated budget projections

On February 11, 2021, the Congressional Budget Office (CBO) released a report, The Budget and Economic Outlook: 2021 to 2031, for the 2021—2031 budget window.

Highlights include:

  • The deficit totaled $3.1 trillion in 2020, and the CBO projects that federal deficits will decline to $2.3 trillion in 2021 and $1.1 trillion in 2022 before generally increasing thereafter (see figure below). The deficit is estimated to be $1.9 trillion in 2031 and $12.3 trillion in total over the 2022—2031 budget window.
  • In relation to the size of the US economy (measured by gross domestic product), the deficit was 14.9% of GDP in 2020, and is estimated to be 10.3% of GDP in 2021, and 4.6% of GDP in 2022. The deficit is estimated to be 5.7% of GDP in 2031 and average 4.4% of GDP over the 2022—2031 budget window.
  • The interest rate on federal government debt is expected to remain at current low levels until 2024, and then increase over the remainder of the 10-year budget window contributing to the increase in the federal government's interest expense.

The economic disruption caused by the pandemic and policy response are the primary drivers of the historic budget deficits in 2020 ($3.1 trillion or 14.9% of GDP) and 2021 ($2.3 trillion or 10.3% of GDP), which are the largest since the end of World War II.

The increase in the deficit during the second half of the 10-year budget window reflects the growth in federal government spending on major entitlement programs (i.e., Medicare and Social Security), plus the consequent increase in interest expenses on the federal government debt. This imbalance is projected to grow over the coming decades.


The pressures on the federal government's finances are expected to accelerate over the long term and will likely be a major driver for future policy. Current estimates indicate that the Medicare trust fund will be depleted in 2024 and the Social Security trust fund will be depleted in 2031. Changes in spending and tax policy will likely be needed to address the federal government's long-term fiscal imbalance and will likely include structural changes to federal entitlement programs or the adoption of new sources of revenue.


Contact Information
For additional information concerning this Alert, please contact:
Quantitative Economics and Statistics Group
   • Bob Carroll (
   • Brandon Pizzola (
   • Aman Rai (