The federal budget deficit fell from $2.8 trillion in fiscal year 2021 to $1.4 trillion in fiscal year 2022; however, the decrease was partly due to a massive reduction in COVID-19 spending, the Congressional Budget Office (CBO) reported Tuesday.
Reductions in pandemic spending, primarily from ending stimulus packages, reducing unemployment benefits, ending loans to small businesses and relief to local, state, tribal and territorial governments, contributed to more than $1 trillion in spending reductions, according to data from the CBO. Another large source of deficit reduction was a $757 billion increase in revenue generated from individual income and payroll taxes, while the largest increase in spending came from the Department of Education, which spent $378 billion on student loan relief. (RELATED: Fraudsters Stole $45 Billion In Unemployment Benefits Using Dead People, Prisoners: REPORT)
“Spending by the Small Business Administration decreased by $300 billion,” the CBO wrote. “In fiscal year 2021, the SBA recorded a total of $323 billion in outlays, primarily for loans and loan guarantees made to small businesses under the Paycheck Protection Program.”
“Spending by the Treasury on coronavirus relief to state, local, tribal, and territorial governments decreased by $138 billion,” the report added.
The remainder can be accounted for by smaller increases and decreases in spending across various government organizations such as Medicare ($21 billion increase), the Department of Treasury ($31 billion decrease) and aid to foreign countries, including Ukraine ($16 billion increase), according to the CBO. Outlays were $62 billion higher in the fiscal year 2022, which ran from Sept. 2021 to Sept. 2022, since some government bills due Oct. 1 2022 were shifted to September and Oct. 1 fell on a weekend.
We are on track to reduce the deficit by more than $1 trillion this year – and that’s on top of a $350 billion deficit reduction last year. Don’t let anyone tell you we can’t afford to invest in America’s families.
— President Biden (@POTUS) October 9, 2022
Nearly $400 billion in increased deficit comes from the fact that the entire projected cost on student-loan debt relief was counted as being spent in 2022, The Wall Street Journal reported. The policy has been criticized for having a projected cost of $570 billion over the next 10 years, entirely offsetting between 16 to 21 years of deficit reduction from the Inflation Reduction Act, according to estimates from the Committee for a Responsible Federal Budget.
President Joe Biden has repeatedly taken credit for reducing the federal deficit in September and August, criticizing Republicans for accusing him of fiscal irresponsibility, according to The Washington Post.
“Our Republican friends talk about, well, ‘Big Spendin’ Biden,'” the President said at a Boston fundraiser on Sept. 12, according to Factbase. “Well, guess what? I lowered your deficit by $350 billion the first year and over $1 trillion this year. We can easily afford it.”
However, the CBO notes that the deficit was approximately $341 billion larger than anticipated, primarily due to the cost of student loan forgiveness. With these costs included, the deficit is the third largest deficit in the past twenty years, tied with 2011, according to the Treasury Department.
The White House did not immediately respond to the Daily Caller News Foundation’s request for comment.
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