
Annual deficits are projected to remain above $1 trillion for the next 10 years, according to the Office of Management and Budget (OMB), which released its annual mid-session review on Friday. The report — which takes into account the Administration’s economic forecast and assumes the President’s legislative agenda is enacted — showed somewhat lower deficits than were anticipated earlier this year, owing to higher projections for economic growth. Nonetheless, the nation will remain on an unsustainable fiscal trajectory due to a structural mismatch between spending and revenues.
OMB estimates that the deficit for 2021 will be $3.1 trillion, $0.6 trillion lower than the $3.7 trillion deficit projected in May. Over the next 10 years, the cumulative deficit would total $13.9 trillion if the President’s policies were carried out; that total is $0.6 trillion lower than estimated in May. Nevertheless, debt held by the public relative to the size of the economy is still anticipated to exceed its all-time high of 106 percent of gross domestic product within the next few years.
While those small improvements in deficits are welcome, this OMB report is the latest reminder of the nation’s unsustainable fiscal trajectory, which has only been exacerbated by the COVID-19 pandemic. As the economy continues to recover from the pandemic, lawmakers should start working to address the challenges that contribute to the rising debt and put America on a better fiscal path.

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Further Reading
With $37 Trillion in Debt, Is the U.S. Headed for More Credit Downgrades?
Three successive downgrades of the U.S. credit rating should alarm elected leaders, but our national debt remains on an unsustainable trajectory.
The Federal Government Has Borrowed Trillions. Who Owns All that Debt?
Most federal debt is owed to domestic holders, but foreign ownership is much higher now than it was about 50 years ago.
The Fed Reduced the Short-Term Rate, but Interest Costs Remain High
High interest rates on U.S. Treasury securities increase the federal government’s borrowing costs.