Has $3.5 Trillion of Pandemic Relief Enacted in 2020 Altered the Nation’s Long-Term Budgetary Path?

The first CBO report of the Biden presidency laid out the fiscal status of the federal government at the start of his administration. Despite the multi-trillion-dollar response to the pandemic and related increases in national debt, the long-term direction of the federal budget has changed little. Social Security, Medicare, and interest costs continue to almost totally dominate future growth in spending and at rates far in excess of the growth in revenues. One small change in the economic projection may be a harbinger of things to come: unlike in its October 2020 report, CBO no longer projects that lower interest rates are sufficient to fully offset the impact of higher debt on the rise in interest payments.

The federal government’s response to the recent pandemic demonstrated its great capacity to act rapidly and mobilize significant resources to save the economy and restore the nation’s health. But even a massive response to an emergency says little about the ability of elected officials to implement longer-term changes in the direction of policy. This report shows that more than all the growth in revenues from 2019 to 2030 remains committed in ways that greatly restrict any new investment in the American people for anything other than healthcare and retirement.