President Joe Biden attempted to sound fiscally conservative when he presented his budget proposal for fiscal 2023 to Congress last March.
“My Budget details the next steps forward on our journey to execute a new economic vision, reduce costs for families, reduce the deficit, and build a better America,” Biden made these remarks in the budget message, which was at the beginning of his proposal.
“Critically, my Budget would also keep our Nation on a sound fiscal course,” He said so.
“The deficit is on track to drop by more than $1 trillion this year, the largest-ever one-year decline,” Biden made the proposal. “Under the Budget policies, annual deficits would fall to less than half of last year’s levels as a share of the economy, while the economic burden of debt would remain low.
“The Budget’s investments go beyond what is possible through tax reforms to ensure corporations and the most wealthy Americans pay their fair shares. This allows us to reduce American families’ costs, strengthen our economy and reduce deficits by more than $1 trillion over ten years.” said the proposal.
But if you scroll down to pages 142 and 143 of Biden’s proposal — its last two pages — you will discover Table S-10: “Federal Government Financing and Debt”
This table tells a different story than Biden himself does.
It includes a subsection that carries the headline: “End of the Year, Debt Outstanding It depicts what the Biden administration expects the federal debt to be, according to the terms of Biden’s budget proposal, at the end each fiscal year until 2032.
It indicated that at the end fiscal 2021, the federal debt total was $28.386 billion. It predicts that at the end fiscal 2032, the total federal debt would be $44.797 trillion.
According to Biden’s budget plan, the federal debt will rise by $16.411 trillion (or 57.8%) in each of the 11 fiscal years that span from the time he took office in fiscal 2021 and fiscal 2032.
This represents an average increase in annual revenue of $1.49 Trillion
What did Biden really mean when he stated that the deficit would fall by more than one trillion dollars under his leadership in fiscal 2022? “the largest-ever one-year decline”?
The relative decrease in the federal deficit for fiscal 2022 was due to the unusually high federal spending increases in fiscal 2020-2021, which were caused by the COVID-19 pandemic.
According to historical budget tables published by Biden’s Office of Management and Budget (February 2019), which ended in September 2019, before the COVID pandemic, the federal government had spent $4,446,956,000,000 and ran an deficit of $983592,000,000. The federal deficit was $3,132,439,000,000 when the pandemic began in fiscal 2020.
Fiscal 2021 was a continuation of the pandemic. As a result, spending rose to $6.822,449,000,000 and deficit was $2.775,337,000,000.
“In early 2020, the U.S. Congress appropriated funds in response to the COVID-19 pandemic,” The USASpending.gov website explains how the federal government spends money. “These funds were made possible through the Coronavirus Aid, Relief, and Economic Security (CARES) Act and other supplemental legislation. In March of 2021, additional funds were appropriated through the American Rescue Plan Act.”
USASpending.gov reports that the federal government spent $4.1 Trillion on the COVID pandemic.
Federal spending declined by fiscal 2022 as the government became less focused on the pandemic. Biden’s OMB estimated that federal spending declined to $5.851,576,000,000 for fiscal 2022, while the deficit dropped from $2,775,337,000,000 to $1.414,950,000,000 in fiscal 2021.
The fiscal 2022 deficit at $1,414,950,000,000 could have been greater than the $2775,337,000,000 COVID era deficit, but it was still $431 358,000,000 or 43.9 percent more than fiscal 2019’s $983,592,000,000 deficit.
It was also $972,990,000,000 higher than the $441,000,000,000,000 deficit that the federal government had in fiscal 2015, when Barack Obama was president, and Biden was vice-president.
Biden plans to bring the federal deficit down to Obama-era levels. No.
Janet Yellen, Treasury Secretary, wrote last week to Kevin McCarthy, House Speaker, asking him to increase the statutory limit for federal debt. She noted that the current limit is currently at 7%. “approximately $31.381 trillion.”
“I am writing to inform you that beginning on Thursday, January 19, 2023, the outstanding debt of the United States is projected to reach the statutory limit,” Yellen. “Once the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligations.”
“It is therefore critical that Congress act in a timely manner to increase or suspend the debt limit,” She said.
Yellen did not suggest that Congress should cut federal spending to reduce the Treasury’s need to borrow more to cover this spending.
She may have just wanted to follow the budget proposal of Biden. If Congress wanted to set a new debt limit to cover all the borrowing Biden’s proposal for the government would allow, it would have to increase this limit by $13.433 billion.
It is more than the federal government has accumulated in the 233 year period 1776-2009.
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