- The Congressional Budget Office (CBO) released a report Wednesday predicting dramatic long-term increases in the federal deficit, debt and spending.
- President Joe Biden has frequently taken credit for a reduction in the deficit the past two years, which the CBO attributes to “waning” spending on coronavirus.
- Federal budget experts agree with the CBO’s assessment, going so far as to say the deficit would have dropped the past two years had the president “done nothing.”
The federal deficit will shrink in 2022 largely due to decreased spending on the COVID-19 pandemic, according to a Wednesday report from the Congressional Budget Office (CBO), contradicting President Joe Biden’s claims that his policies ought to be credited for the reduction.
The Biden Administration has frequently taken credit for this year’s decrease in the deficit, but the CBO credits the decrease to shrinking costs related to the COVID-19 pandemic. Coronavirus relief funds that were scheduled to be dispersed during the pandemic have largely been spent, and as the government is not scheduled to spend any more, there has been a reduction in the deficit this year, according to the CBO.
President Biden has frequently referred to the reduction in the deficit as a personal accomplishment, The Daily Caller reported.
“I don’t want to hear any more of these lies about reckless spending. We’re changing people’s lives!” Biden shouted in June at the AFL-CIO Convention. “And because of the facts this year, we’re delivering the biggest drop in the deficit in the history of the United States of America.”
“The first year I was president, I cut the federal deficit by $350 billion”, said Biden on July 6, according to Factbase, a database which compiles presidential remarks.
However, the deficit under Biden is larger than what the CBO projected it would be had some Trump-era policies remained in place, CNN reported.
We’ve reduced the deficit by $350 billion, and we’re on track to reduce the deficit by $1.5 trillion this fiscal year.
There’s more work to do, but this has never happened before in American history.
— Joe Biden (@JoeBiden) May 18, 2022
“The actions of the administration and Congress have undoubtedly resulted in higher deficits, not smaller ones,” Dan White, senior director at Moody’s Analytics, told CNN.
These actions include passing the $1.9 trillion COVID relief bill, known as the American Rescue Plan, according to CNN.
Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, told CNN that the President’s claims are “almost bizarro world,” and that “had President Biden come into office and done nothing,” the deficit would be significantly lower.
However, current policies enacted under the Biden administration will lead to new deficit increases starting as soon as next year, according to the report.
“If current laws governing taxes and spending generally remained unchanged, the federal budget deficit… would nearly triple over the next 30 years,” the report states, citing the rising cost of interest payments on outstanding U.S. debt, healthcare and Social Security.
As the deficit is predicted to grow, so too are national debt and spending, according to the CBO report.
Federal debt is projected to equal 98% of gross domestic product (GDP) in 2022, climbing as high as 107% of GDP by 2031, according to the CBO. The report credits “high inflation” and the continued growth of the inflation-adjusted GDP for keeping debt lower than it might otherwise have been.
Revenue is projected to remain relatively consistent, at 19.6% of GDP in 2022, dropping slightly to 19.1% in 2052, according to the CBO. The forecast predicts a short-term drop from the current historically high level before planned changes to tax policy cause steady increases over time.
As the deficit increases, debt is projected to rise to 185% of GDP by 2052, which the CBO warns could “slow economic growth, push up interest payments to foreign holders of U.S. debt, [and] heighten the risk of a fiscal crisis.”
The DCNF contacted the White House, requesting comment on these figures and if the administration had any plans for long-term debt reduction. The White House did not immediately respond.
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