The Concord Coalition
COVID
in the Shadow of Debt

Before COVID-19, federal debt was already
approaching record levels
Source: Congressional Budget Office THE CONCORD COALITION
Percent
World War I
Great Depression
World War II
Great Recession

Caused by a long-standing structural imbalance
between revenues and spending
Source: Congressional Budget Office, Update to the Budget Outlook, September 2020 THE CONCORD COALITION
Outlays
Revenues
Projected
Average 1970-2019: 20.4%
Average 1970-2019: 17.4%
23.0%
17.8%
●
●

Unemployment jumped 10 points in one month
and still remains historically high
Source: Bureau of Labor Statistics, Unemployment Situation Report THE CONCORD COALITION

The COVID-induced recession is deep
Source: Bureau of Economic Analysis THE CONCORD COALITION
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020

The federal fiscal response to COVID-19 has been
significant but appropriate
THE CONCORD COALITION
March 18
H.R.6201
Family First
Coronavirus
Response Act
$192 billion
March 27
$1,721
billion
H.R.748
Coronavirus Aid, Relief, and Economic Security (CARES) Act
March 6
$8 b
H.R.6704
Coronavirus
Preparedness
and Response
Supplemental
Act
April 24
$483 billion
H.R.266
Paycheck Protection
and Health Care
Enhancement Act

With significant consequences on near-term
budget deficits
Source: Congressional Budget Office, Update to the Budget Outlook, September 2020 THE CONCORD COALITION
March
Baseline
March
Baseline
COVID-19
+ Interest
COVID-19
+ Interest
Trillions
$1.1 T
$2.0 T
$1.0 T
$0.8 T
$3.1 T
$1.8 T

Post-COVID, a record no one wants
Source: Congressional Budget Office, Update to the Budget Outlook, September 2020 THE CONCORD COALITION
Projected

Our nation’s fiscal challenges do not end with
COVID-19
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION
2019 2025 2030 2035 2040 2045 2050
Projected
Waning Budgetary
Effects of COVID-19
Percent
-12.6
-4.6

Growing deficits and debt remain long after the
budgetary effects of COVID are gone
THE CONCORD COALITION
2019 2025 2030 2035 2040 2045 2050
195
78
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020

Entitlements and interest costs drive spending
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION

Revenue growth is constrained by factors
affecting output
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020
THE CONCORD COALITION
Potential Labor Force Size
Potential Labor Force
Productivity
Percent
2.4
1.6

Change in Revenues as a Percent of GDP
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION
Percent
Expiring tax provisions
*Other
Real bracket creep (wage growth > economic growth)
*COVID response, rising taxable retirement income, faster earnings growth among higher income earners,
rising cost of non-taxable fringe benefits

Delay makes policy solutions more
challenging
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION
Deficit reduction needed
by starting in fiscal year…
…to reach debt equal to 2019 level in 2050 (79% GDP)
…to reach debt equal to 2020 level of GDP in 2050 (100% GDP)$730 billion savings in yr 1
$900 billion savings in yr 1

Why should YOU care about the debt?
• Like climate change, once debt becomes a conspicuous problem, it may be too late.
• Rising debt reduces the fiscal space needed to respond to the next crisis (natural
disasters, war, pandemic)
• Interest costs, even under low interest rates, will grow and crowd out needed
investments (student loan reform, green energy, broadband)
• Politicians have strong incentives to leave the debt problem for future generations
– an irresponsible and immoral legacy to leave for our children
• We can change this trajectory by demanding answers and action from our
elected officials.
THE CONCORD COALITION