July 18, 2024

CBO: US needs $900B annually to restore pre-COVID debt

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The Congressional Budget Office have revealed that the United States need about $900 billion annually for 25 years to restore her debt to pre-covid levels.

The CBO stated this in a statement released on Tuesday September 22, 2020.

The CBO found that if the US takes fiscal action starting in 2025, huge changes to spending and taxation would be required to stabilize the nation’s debt at the pre-pandemic level of 79% of gross domestic product (GDP).

“While reducing the federal debt increases the resources available for private investment in capital goods and services, lower deficits and debt would eventually reduce prices and interest rates, which would then increase the resources available for private investment, household consumption and exports,” the statement reads.

“If policymakers decided to reduce the deficit sooner rather than later, the benefits would include a smaller accumulated debt, smaller policy changes required to achieve long-term outcomes, and less uncertainty about the expected changes,” it adds.

The US national debt stood over $26.7 trillion as of 0540 GMT, while federal spending was at almost $6.2 trillion and the deficit at more than $3.1 trillion.

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