Brief The Federal Budget Outlook After COVID-19
Alan J. Auerbach, William G. Gale
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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.

Research Areas Taxes and budgets
Tags Federal budget and economy Federal tax issues and reform proposals
Policy Centers Urban-Brookings Tax Policy Center