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Brief

The Federal Budget Outlook After COVID-19

Alan J. Auerbach, William G. Gale
November 23, 2020
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Abstract

This policy brief shows that the COVID-19 pandemic and associated policy responses substantially raised federal deficits, but only on a temporary basis. We project that the debt-to-GDP ratio, currently 98 percent, will rise to 190 percent in 2050 under current law, compared to a pre-COVID baseline projection of 180 percent. Sharply lower projections of interest rates for the next dozen years help moderate future debt accumulation. Because of the macro-stabilization effects of fiscal tightening, and because low interest rates create “breathing room” for fiscal policy, we do not see the current debt status as necessitating any immediate offsetting response.

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Federal Budget and Economy
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Meet the Experts

  • Alan J. Auerbach
  • William G. Gale
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