The deficit will increase to 107 per cent of gross domestic product (GDP) by 2023, "the highest in the nation's history", surpassing the previous peak in 1946 after World War II, according to the Congressional Budget Office (CBO). As a congressman and co-founder of the conservative Freedom Caucus, Meadows frequently railed against bipartisan spending deals because of the hit to the deficit. The last time the U.S. had a balanced budget was in 2001.
With tens of millions of people out of work and countless businesses struggling or shuttered, tax revenues are falling.
The Congressional Budget Office published its latest report on federal deficits and debt on Wednesday. Meanwhile, the economy shrank 9.5% in the second quarter, bringing debt as a share of GDP to 105.5%, compared with 82% in the first quarter. The spending propped up incomes through stimulus checks for households, enhanced jobless benefits and emergency small-business loans.More news: Qualcomm Introduces 5G Capabilities to Snapdragon 4-Series Platform
Despite the historically high debt levels, the government's borrowing costs are expected to remain low for the next several years.
Deficit scolds have long warned that rising levels of debt will serve as a drag on the economy in the coming years. That isn't expected to happen this time.
The deficit in 2021 is projected to be 8.6 per cent of GDP, according to the report.
If interest rates rise too high, servicing the debt will put significant strain on the budget. The US debt began increasing in the 70s and 80s as balanced budgets became more of an exception.More news: Saudi Arabia opens airspace for UAE-Israel flights
"Congress must spend what it takes to end the pandemic and keep vulnerable families and businesses afloat". Democrats proposed a $3 trillion scheme but Republicans balk at spending above $1 trillion.
Sen. Ted Cruz (R-Texas) is among the fiscal hawks who argue that additional relief measures won't help. White House chief of staff Mark Meadows said last week that the president was prepared to sign a $1.3 trillion bill, but House Speaker Nancy Pelosi has said she wanted something closer to $2.2 trillion.
"I think we're going to continue to see the USA economy recover", Tyler Goodspeed, the acting chairman of President Trump's Council of Economic Advisers, said at a press briefing last month.
Federal Reserve Chairman Jerome Powell and some economists have said Congress needs to do more to support the nascent recovery, especially with unemployment in double digits and the virus continuing to spread throughout the country.More news: Biden looks to keep campaign focus on Trump's coronavirus response