The national debt is at an all-time high and this year's budget deficit is forecasted to be the third or fourth-largest in American history—but President Joe Biden claims these are signs that his administration is overseeing a period of fiscal austerity.
Really! Here are some words that actually tumbled out of the president's mouth at a press conference on Wednesday morning: "We're on track to cut the federal deficit by another $1.5 trillion by the end of this fiscal year. The biggest decline ever in a single year, ever, in American history."
"And the biggest decline on top of us having a $350 billion drop in the deficit last year, my first year as president," Biden continued. "The bottom line is that the deficit went up every year under my predecessor—before the pandemic and during the pandemic—and it's gone down both years since I've been here. Period. They're the facts."
Those facts, however, exclude a few key details. Like the fact that Biden took office the year after the budget deficit hit previously unimaginable highs due to a completely unprecedented spending binge triggered by a once-in-a-generation public health disaster.
The annual budget deficit—the gap between how much the government collects in tax revenue and how much it spends—jumped from about $900 billion in 2019 to more than $3.1 trillion 2020, then declined to about $2.8 trillion last year. The White House now expects the deficit for the current fiscal year, which ends in September, to weigh in at about $1.3 trillion.
Yes, relative to last year, that means the deficit will decline by about $1.5 trillion this year. And if you can't remember anything that happened before 2020, then I guess that might seem like an accomplishment.
Relative to almost any other year in American history, however, this is about the exact opposite of fiscal responsibility. Outside of the two years of the pandemic, the largest deficit in American history was a little over $1.4 trillion in 2009. That year will likely remain ahead of 2022 (and if you adjust for inflation, it's unlikely we'll approach that level again in the too-near future).
That means Biden is bragging about presiding over what's likely to wind up as the fourth-largest deficit in history. This is what passes for fiscal responsibility in Washington, D.C., these days.
In fact, if you look at the actual budgetary baselines published by the Congressional Budget Office—that is, the ongoing amount of annual federal spending absent any emergency stimulus bills like the ones passed on several occasions during the height of the pandemic—Biden has overseen a noticeable increase in the deficit above the pre-pandemic baseline. According to the Committee for a Responsible Federal Budget, a fiscal watchdog group that advocates for lower deficits, Biden's policies have added about $2.5 trillion to the deficit over the next 10 years.
"Taking credit for a deficit drop that is largely the result of expiring stimulus and higher inflation makes little sense," reads a statement from Maya MacGuineas, the committee's president. MacGuineas praises Biden for even talking about fiscal responsibility—something that few policymakers do these days—but points out that several of the administration's biggest policy plans are not paid for and that Biden has not put forward a plan to deal with the pending fiscal insolvency of entitlement programs like Social Security and Medicare.
"It is wonderful to have a President in the White House who acknowledges the importance of fiscal responsibility," MacGuineas says, "now we need more policy choices to back that up."
However, Biden isn't talking about deficit reduction as something his administration is seeking to accomplish—he's talking about it as a done deal. He's trying to take credit for two years of falling deficits as a way to justify more spending and bigger deficits in the years to come. The budget he presented to Congress earlier this year envisions growing deficits despite calling for big tax increases on the wealthy—the annual deficits will remain above pre-pandemic levels for the rest of the next decade and will hit $1.8 trillion by 2032. And that doesn't even include the cost of several big-ticket items, like Biden's Build Back Better plan, which is relegated to a footnote in the budget even though it would cost trillions of dollars.
Yes, it's a big deal for a president to call a press conference to talk about the federal budget. More talk about fiscal issues in Washington is welcome. Now we just need a president who will do so without spreading misinformation.
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