President Biden on Friday touted recent figures showing the federal budget deficit fell by $1.4 trillion in fiscal 2022 from the prior year’s levels as Democrats work to fend off Republican attacks on the economy and inflation ahead of the midterm elections.
Biden boasted the decline as “the largest one-year drop in American history” in remarks to reporters on Friday.
“Let me repeat that. The largest ever decline to the federal deficit,” he said. “Let me be clear. This record deficit reduction includes the cost of my student loan plan and everything else we’re paying for.”
Treasury Secretary Janet Yellen also marked the numbers as “further evidence of our historic economic recovery” on Friday, shortly after her office released data showing the deficit reached $1.375 trillion in fiscal 2022, which ended last month.
The Biden administration said the figure was $40 billion less than forecasted in Biden’s 2023 budget and half of the fiscal 2021 deficit, which reached $2.8 trillion, the second largest in history. The new reporting also found that, as a percentage of gross domestic product, the fiscal 2022 deficit “was 6.8 percentage points lower than in the previous year.”
“The President’s economic plan is focused on growing our economy from the bottom up and the middle out,” Shalanda Young, director of the Office of Management and Budget, said in a statement. “Under his leadership, more Americans are working today than at any point in our country’s history, our economy has added more than 10 million jobs, manufacturing is booming, and we cut last year’s deficit in half.”
However, budget hawks and conservatives have seized on the news, sounding a different note by taking aim at Democratic pandemic-related relief like the American Rescue Plan and the Biden administration’s recent student loan forgiveness plan that they’ve panned as costly amid rising inflation.
“We borrowed $1.4 TRILLION last year. That is not an accomplishment — it’s a reminder of how precarious our fiscal situation remains,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement.
“The entirety of the decline in the deficit between 2021 and 2022 can be attributed to the expiration of temporary COVID relief, not due to a renewed era of fiscal responsibility,” she said, while estimating the “deficit would have been almost $400 billion lower had the Biden Administration not decided to enact an inflationary, costly, and regressive student debt cancellation plan in August.”
The news on Friday comes weeks after Biden signed a sprawling climate, health care and tax bill, dubbed the Inflation Reduction Act, into law.
Democrats have touted the plan, a key piece of the president’s agenda, as a tool to fight inflation by putting billions toward deficit reduction. And while some experts agree the plan could be a step in the right direction to getting the country’s finances on track, many have downplayed the impact the plan would have on rising costs.
The press conference comes as Republicans have been hammering Democrats on the economy to win over voters upset about rising prices weeks before the 2022 midterm elections.
At the same time, Democratic leadership has acknowledged the party has room to improve in its messaging on inflation, as recent polling shows Republicans gaining the upper hand in key races.
During the press conference on Friday, Biden noted that “the polls have been all over the place” but expressed optimism that Democrats will see “one more shift back to our side [in] the closing days.”
“We’re starting to see some of the good news on the economy. Gas prices are down sharply in 46 of the 50 states because of what I’ve been doing. We’re moving in the right direction,” Biden said, before going after Republicans for “mega MAGA trickle down” policies.
“If Republicans get their way the difference is going to soar, the tax burden is going to fall on the middle class and Republicans are working really hard,” the president said, while taking aim at GOP-backed proposals in areas like taxes and Social Security.