Deficits, Debt,

the Pandemic & the Economy

July 2020

CRFB.org
 Annual Deficits Were Already Bad
Billions
$4,000

$3,500 Pre-Crisis Deficit Projections (March

2020)
Updated Deficit Projections (July
$3,000 2020)

$2,500

$2,000

$1,500

$1,000

$500

$0

HISTORIC PROJECTED
-$500
3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3
9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/

Source: CBO, CRFB Calculations

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 Debt Will Exceed Size of the Economy This Year
Percent of GDP
125%
121%

Pre-Crisis Debt Projections (March

2020)
101%
100% Updated Debt Projections (July 2020)

75%

50%

25%

HISTORIC PROJECTED
0%
0 .. . 0 ... 0 ... 0 .. . 0 .. . 0 ... 0 ... 0 ... 0 ... 0 . .. 0 . .. 0 . .. 0 ... 0 . .. 0 . .. 0 ... 0 ... 0 . .. 0 . .. 0 . .. 0 ... 0 ... 0 . .. 0 . .. 0 ... 0 ...
3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3
9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/ 9/

Source: CBO, CRFB Calculations

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 Some Consequences of Rising Debt
 Economic Effects
 “Crowding Out” of private sector investment, leading to slower economic growth
and slower wage growth
 Higher Interest Rates on loans for households and businesses
 Budget Effects
 Higher Government Interest Payments displacing other government priorities and
investments
 Insolvent Entitlement Programs such as Social Security and Medicare will ultimately
face abrupt cuts
 Respond to a Crisis
 Reduced Fiscal Space for the government to react to wars, recessions, or other
national needs and emergencies
 Missed Opportunities
 Higher debt will limit resources available for areas such as education, infrastructure,
supports for low-income families, and funding for basic research that can help grow
the economy and improve our standard of living
 Generational Unfairness with younger and future generations paying the price of
today’s consumption
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There is a time for borrowing…

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www.COVIDMoneyTracker.org

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Policymakers Have Committed Trillions to Save The Economy
Trillions
$6,000

$5,000 Amount Authorized

Amount Disbursed/Committed
$4,000 >$5.5 trillion*
Deficit Impact

$3,000
$3.6
$2.4trillion
trillion

$2,000

$1,000 $2.3 trillion $1.9 trillion

$380 billion
$80 billion
$307 billion
$0
ons ons ons
A cti Ac
ti
Ac
ti
rve tive tive
e a a
es isl str
alR L e g in
i
er m
F e d Ad

*Some Fed facilities and programs have no announced cap or maximum, in which case, we assume the CRFB.org
max as the largest amount disbursed or committed since the crisis began.
 And Half the Fiscal Support is Out the Door
Billions
$900 Remaining
Committed/Disbursed (Tranche
$800 II) $780
Committed/Disbursed (Tranche I)
Total Allowed
$700 $670
$646
$600
$500
$500
$194
$400

$293 $282 $300

$300
$200 $192
$200 $80
$330 $150
$270 $300
$100 $201 $13
$135 $147 $142
$100 $100
$53
$0 Paycheck Economic Unemployment Business Economic Health Families Coronavirus Tax Filing Other
Protection Impact Benefits Tax Relief Stabilization Provider First Relief Delay
Program Payments Fund Relief Fund

Note: Current as of 6/18

Source: Congressional Budget Office, Joint Committee on Taxation, legislative summaries, agency CRFB.org
reports, Federal Reserve, media reports, CRFB estimates 8
 Through Multiple Laws, Orders, and Facilities
Response Allowed Disbursed/Committed Deficit Impact
Legislative Actions $3.6 trillion $1.9 trillion $2.4 trillion
Coronavirus Preparedness & Response Supplemental Appropriations Act $8 billion ~$3 billion $8 billion
Families First Coronavirus Response Act $192 billion ~$61 billion $192 billion
CARES Act $2.7 trillion $1.5 trillion $1.7 trillion
Paycheck Protection Program and Health Care Enhancement Act $733 billion $304 billion $483 billion

Administrative Actions ~$380 billion ~$307 billion ~$80 billion

Declare national emergency ~$50 billion Unknown ~$50 billion
Delay tax filing deadline to July 15 ~$300 billion ~$300 billion $0
Other executive actions ~$30 billion $7 billion ~$30 billion

Federal Reserve Actions >$5.5 trillion $2.3 trillion N/A

Interest rate changes N/A N/A N/A
Asset purchases >$2.0 trillion** $1.9 trillion N/A
Liquidity measures >$1.5 trillion $225 billion N/A
Emergency lending programs and facilities >$2.0 trillion $106 billion N/A
Deficit impact is from 2020-2030
**Represents amount disbursed plus the amount scheduled to be purchased through the following week, currently $80 billion for Treasuries and $40 billion
for mortgage-backed securities.

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 Helping Citizens Understand the Legislation
Source Total Cost: Recipient
Direct P
ay ments: $
2 90 billio
$2.3 Trillion
n
$610 billion
olds:
Unemploym Househ
ent Benefits
: $260 billion

Tax Breaks: $300 billion billion

u si ne ss es* : $525
Large B
lion
Airline Industry: $75 bil

Loans: $875 billion

(Up to $366 billion forgiven)
Small Businesses : $600 billion
†

States & Municipalities: $175 billion

Grants: $230 billion
FEMA: $45 billion

on Health Providers: $185

g: $325 billi billion
Other Spendin
Other: $65 billion

† This includes $170 billion of tax cuts for businesses other than corporations, some of which are large companies.
* This includes $454 billion to set up a $4.5 trillion Fed facility, which could help support large businesses but also small
businesses and state and local governments. CRFB.org
Source: Legislative offices, JCT, bill text, CRFB estimates. 10
 And Who is Receiving Federal Support
Percent of Total Loans Disbursed
Health Care and Social Assistance
Professional, Scientific, and Technical Services
Construction
Manufacturing
Accommodation and Food Services
Retail Trade
Other Services (except Public Administration)
Wholesale Trade
Administrative/Support/Waste Management/Remediation Services
Transportation and Warehousing
Real Estate and Rental and Leasing
Finance and Insurance
Educational Services
Unclassified Establishments
Information
Arts, Entertainment, and Recreation
Agriculture, Forestry, Fishing and Hunting
Mining Approved Dollars (Tranche I)
Public Administration Approved Dollars (Tranche II)
Management of Companies and Enterprises Approved Dollars Total
Utilities
$0 $15 $30 $45 $60 $75

Paycheck Protection Program Loans, by Industry

Source: Treasury Department

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 Cost of COVID-19 and Great Recession Responses
Billions
$2,800

$8
$2,400 $192

$500
$2,000

$1,600 $322
$101
$140
$1,200 $185

$303 $1,811
$800

$400 $755

$0
Great Recession COVID-19 Recession

Note: Figures reflect 5-year cost estimates CRFB.org

Source: CBO, CRFB Calculations 12
 COVID-19 Response Has Been Much More Sudden
Percent of GDP
14%

12%

CO
10%

VID
-19
8%

6%

Great
4% Recess
ion

2%

0%

-2%
ar0 ar1 ar2 ar3 ar4 ar5
Y e Y e Y e Y e Y e Y e

Source: CBO, CRFB Calculations

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 The U.S. Is Issuing Trillions in New Debt
Billions of Dollars of Net Debt Increases
$1,600,000,000,000

$1,400,000,000,000 $1,378,847,535,446

$1,200,000,000,000

$1,000,000,000,000

$800,000,000,000 $759,150,226,753
$717,509,203,717

$600,000,000,000

$385,630,573,958
$400,000,000,000
$261,721,350,594
$212,276,734,911 $200,415,107,970
$200,000,000,000 $172,218,590,196
$124,109,868,264
$65,021,704,001
$42,192,320,279
$22,762,969,868
$9,493,306,563 $29,029,108,276
$0
-$11,602,525,797
-$13,860,736,705
-$200,000,000,000

Source: Treasury Department

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 Who Will Buy this New Debt?
Trillions
$20,000

FED
$16,000 14%

$12,000 DOMESTIC
47%

$8,000

FOREIGN
$4,000
39%

$0
Dec. 2019

Source: Federal Reserve Board of Governors, Treasury Department

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 Federal Reserve Assets Have Spiked Dramatically
Trillions
Jul. 1st:
$6.97 trillion
$7
$0.84
trillion
$6

$1.91
$5
Feb. 26th:trillion
Other $4.16 trillion
$4
Mortgage Backed
Securities
$3

$4.21
$2
trillion

$1 U.S. Treasuries

$0

Source: Federal Reserve Board of Governors

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…and there is a time for fiscal
responsibility

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