‘Unprecedented’
As President Joe Biden on Monday touted his apparent deficit-cutting mettle, a nonpartisan fiscal policy research group warned of an “unprecedented” explosion in the federal budget deficit, which it said is on track to double to $2 trillion this year.
In a Labor Day speech in Philadelphia on Monday, President Biden touted his economic policies while taking a series of jabs at his predecessor, President Donald Trump.
“Unlike the last president, in my first two years … I cut the deficit $1.7 trillion,” President Biden boasted.
What President Biden failed to mention, however, is that most of the massive deficit drop in 2022 was a one-off, driven by what experts say was a one-time inflation-related explosion in tax revenue and capital gains.
And while the president touted his supposed deficit-slashing accolades, the Committee for a Responsible Federal Budget (CRFB), a nonpartisan organization that seeks to educate the public on issues with significant fiscal policy impact, projected that the deficit under the president’s watch would double in 2023 to around $2 trillion.
“Deficits are slated to double this year, from $1 trillion up to $2 trillion, when you exclude student debt cancellation,” CRFB senior vice president Marc Goldwein said in a post on X, the platform formerly known as Twitter.
“This is unprecedented given the economy,” Mr. Goldwein added, referring to the fact that it’s unusual for deficits to rise so sharply when the economy is doing relatively well.
Deficit 122 Percent Higher so Far in 2023
After record government spending in 2020 and 2021 in part to offset the negative economic impact of the COVID-19 pandemic, the federal budget deficit dropped by a record amount in 2022 from near $3 trillion to around $1 trillion.
The Congressional Budget Office (CBO) said in March 2023 that the government took in $4.9 trillion in 2022, with more than half coming from receipts from individual income taxes, which were the highest on record as a percentage of gross domestic product.
In February, the CBO projected that the budget deficit for 2023 would rise to around $1.4 trillion, while projecting that, in coming years, deficits would gradually rise each year, hitting $2.7 trillion in 2033.
By Tom Ozimek
