The US budget deficit has been cut in half for fiscal year 2022, the biggest drop in history after two years of huge Covid-related spending.
Although still large in historical terms, the budget deficit fell to $1.375 trillion, from the 2021 deficit of $2.776 trillion.
The decline would have been steeper if not for the Biden administration’s student loan forgiveness program. Education spending totaled $639.4 billion for the fiscal year, $408 billion more than expected.
Fiscal 2022 saw $4.896 trillion in revenue versus $6.272 trillion in expenses. The spending number represented a drop of about $550 billion in spending, but an increase of $850 billion in revenue. The revenue total is by far the highest ever recorded by the US government.
Deficits for the previous two years soared as Congress spent massive sums to fight the pandemic.
U.S. Treasury Secretary Janet Yellen listens to a reporter’s question during a press conference during the annual meetings of the International Monetary Fund and the World Bank in Washington, U.S., October 14, 2022.
Elizabeth Frantz | Reuters
The deficit hit a record $3.13 trillion in 2020 due to more than $5 trillion in CARES Act spending and other spending. In 2019, the deficit was $983.6 billion. Prior to 2020, the highest deficit on record was $1.41 trillion in 2009 when the financial crisis ended. The United States briefly recorded a surplus from 1998 to 2001.
In fiscal year 2021, lawmakers passed the US bailout, a $1.9 trillion spending package that the White House said helped the country through a severe health and economic crisis, but which critics say was unnecessary and helped fuel the highest rate of inflation in more than 40 years. years.
President Joe Biden, however, blamed the deficit on Republicans for approving the 2017 tax cut bill.
“The federal deficit has grown every year in the Trump administration — every year he was president,” he said. “It went up before the pandemic. It went up during the pandemic. It went up every year on his watch, the Republican’s watch.”
Biden called the GOP’s budget approach a “mega-MAGA trickle-down” which he defined as “the kind of policies that have failed the country before and will fail again.”
Treasury Secretary Janet Yellen said Friday’s budget statement “provides further evidence of our historic economic recovery, driven by our vaccination efforts and the US bailout.”
Yellen added that the results also showed “Biden’s commitment to strengthening the fiscal health of our country.”
Earlier this year, the White House pushed through the Cut Inflation Act aimed at various areas, including cutting medical costs, boosting clean energy and reforming the tax code. However, inflation continued to climb and administration officials stressed that the Federal Reserve’s main role in fighting price increases is through raising interest rates.
—CNBC’s Emma Kinery contributed reports.