Biden’s unwarranted boast about cutting the budget deficit
Just in the week leading up to the 60 Minutes interview, the president mentioned cutting the budget deficit by $350 billion six times, sometimes saying he wanted to counter accusations that he was overdoing the federal tab.
“By the way, when you hear your Republican friends or anybody say, ‘Boy, they’re spending a lot of money,’ guess what? We cut the budget [deficit] $350 billion last year,” he said at an infrastructure event in Boston on September 12. At a fundraising event in the city, Biden said, “Our Republican friends are talking about ‘Big Spendin’ Biden. Well guess what? I reduced your deficit by $350 billion in the first year and over $1 trillion this year.
And when the president on August 24 unveiled his student loan forgiveness plan, which some estimates would cost at least $500 billion over ten years, he remarked, “There is a lot of deficit reduction to pay for programs – cumulative deficit reduction – to pay for programs multiple times.
Biden never quite says his policies reduced the deficit. But when he says things like, “I’ve reduced your deficit,” he’s definitely pointing that out.
The President is playing a rhetorical ball game. He tries to dazzle listeners with impressive numbers. But the reality is that it increased the budget deficit, not reduced it.
Budget deficit figures are complicated – and often boring. So we’ll try to keep this as simple as possible.
The best way to determine a president’s impact on budget deficits is to look at what was predicted before he took office and then what happened after his policies were enacted.
The Congressional Budget Office, the official marker, estimated in February 2021 that the budget deficit would shrink significantly in fiscal years 2021 and 2022 as pandemic emergency spending would be canceled. Fiscal deficits would be high in both years, but the red ink would start to diminish.
When Biden says he cut the deficit by $350 billion in 2021, that’s a real number. In its latest report, the CBO puts the figure at $360 billion.
But here comes the shell game.
Before Biden took office, the CBO said in its early 2021 projection that the budget deficit was expected to shrink by $875 billion in 2021. But then Biden enacted additional relief funds and other new policies. , resulting in a more modest decline of $360 billion.
The budget deficit was expected to decline further in 2022, and it did under Biden. But the combined 2021 and 2022 budget deficits were projected by the CBO at $3.31 trillion. Now CBO says they will be $3.81 trillion.
In other words, Biden is bragging about cutting budget deficits even as he has increased the national debt by about $500 billion more than originally projected.
Of course, budget projections are not set in stone, especially over the long term. Technical factors, such as inflation raising tax revenues, can change the underlying composition of spending and revenues. A White House official told the Fact Checker that spending (spending) fell by about $950 billion between 2021 and 2022, but revenue also rose by about $800 billion.
The official noted that the deficit’s share of gross domestic product (GDP), the broadest measure of the economy, had fallen to 4.2%, down from 4.6% in the CBO’s February 2021 projections. “It shows that the strong recovery under President Biden has not only resulted in a strong recovery, but also led to better fiscal outcomes,” the official said.
But Marc Goldwein, senior vice-chairman of the nonpartisan Committee for a Responsible Federal Budget (CRFB), calculates that deficits would have been around 3.3 or 3.4% of GDP if everything were the same as the February 2021 projection. The big difference was the impact of inflation, according to the CBO – and an unexpected windfall of $80 billion in 2021 for the government in the sale of telecommunications licenses.
In other words, again, the data shows that the deficit picture has worsened under Biden.
Moreover, any suggestion that this so-called deficit reduction will help pay for student loan relief is misleading. The budget deficit rose primarily because of a national emergency. “It’s like a family going into debt for a one-time medical expense of $100,000, and then the next year claiming they could afford to borrow $50,000 for a sports car because the medical expenses were completed,” said Brian Riedl, budget expert at the Manhattan Institute.
Now that we’ve looked at the fiscal impact of the first two years of the Biden presidency, let’s look to the future.
Unexpected emergencies, such as the war in Ukraine, often put pressure on the federal budget. Biden managed to push through an infrastructure bill long sought after by members of both parties. We take no position on the necessity or advisability of certain programs. We only look at the numbers — and they also show future increases in the deficit.
According to new BFRC accounting, under Biden an additional $4.8 trillion in borrowing was added over the 2021-2031 period.
“That $4.8 trillion is the net result of about $4.6 trillion in new spending, about $500 billion in tax cuts and relief, and $700 billion in interest charges. additional, partially offset by $400 billion in spending cuts and $600 billion in revenue-raising policies,” the CRFB said.
Policies that have inflated deficits include:
- Biden’s relief bill ($1.85 trillion added to deficits).
- The spending bill for fiscal year 2022 ($625 billion).
- The bipartisan infrastructure bill ($370 billion).
- Health and disability benefits for veterans exposed to toxic substances ($280 billion).
- Increase Supplemental Nutrition Assistance Program (SNAP) benefits by 21% ($185 billion).
- Health-related executive orders ($175 billion).
- CHIPS Act for the expansion of semiconductor manufacturing in the United States ($80 billion).
- Help Ukraine in its war against Russia ($55 billion).
- Student debt relief and suspension of repayments ($750 billion).
On the other side of the ledger, the energy and health care bill dubbed the Cut Inflation Act was designed to show about $240 billion in deficit reduction over ten years. But the bill would only reduce deficits by about $90 billion if a three-year extension of expanded health care subsidies becomes permanent, the CRFB estimated.
You know how it is in Washington – a temporary measure often continues to be extended if the benefits remain popular. And, from a budgetary point of view, extending a program for only three years costs less, on paper, than one in place for ten years.
Biden quotes real deficit reduction numbers, but does so in a way to mislead listeners.
The president omits important context. The budget deficit was supposed to narrow as massive spending caused by the pandemic faded.
Indeed, the fiscal deficit picture, now and in the future, would have been better without Biden’s policies. He has every right to argue that these policies were necessary. But he cannot suggest that they have reduced the budget deficit.
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