President Biden’s pledge to cut the deficit by more than $1 trillion by the end of the year has budget experts and fiscal hawks scratching their heads, especially as the White House pushes trillions in new spending.
Republicans say that if Mr. Biden was serious about cutting the deficit he would not be asking Congress to revive the administration’s $1.75 trillion social welfare and climate change package.
“Want to lower the deficit,” said Sen. Marsha Blackburn, Tennessee Republican. “Spend less and cut the size of the federal government.”
During his first State of the Union address, Mr. Biden attempted a delicate balancing act of pledging to cut the deficit while urging lawmakers to pass trillions in new federal spending.
“By the end of this year, the deficit will be down to less than half of what it was before I took office,” he said. “I’m the only president ever to cut the deficit by more than one trillion dollars in a single year.”
Shortly after touting the pledge, Mr. Biden pivoted to championing his long-stalled social welfare package, once known as the Build Back Better Act but now christened Build Back America.
“When we invest in our workers, when we build the economy from the bottom up and the middle out together,” said Mr. Biden. “We can do something we haven’t done in a long time: build a better America.
The Congressional Budget Office estimates the legislation, which includes $500 billion in new climate change spending and billions for social welfare initiatives like universal pre-k, will balloon the deficit anywhere between $367 billion to $3 trillion over the next decade.
The White House defends its push to revive Build Back Better, arguing that it will help cut the deficit and combat inflation.
“My plan to fight inflation will lower your costs and lower the deficit,” Mr. Biden said. “Seventeen Nobel laureates in economics say my plan will ease long-term inflationary pressures.”
Fiscal hawks do not buy the claims, however. They say that Mr. Biden is backing a typical tax-and-spend political agenda and only giving lip service to those concerned about runaway deficits.
“Even liberal economists like the Obama White House’s Larry Summers warned that Biden’s big spending spree would set off inflation,” said Sen. Mike Braun, Indiana Republican. “We are lucky so much of this reckless economic agenda failed.”
Mr. Biden’s rhetoric around the deficit is similarly undercut by the White House’s push for billions in new spending for coronavirus testing and military and humanitarian aid to Ukraine. While some of those initiatives have bipartisan support, they do little to bolster Mr. Biden’s credibility as a deficit and spending hawk.
Budget experts add that Mr. Biden’s claims to have already reduced the deficit by a trillion are also deceptive. They note the White House is using as its benchmark 2020 — a year in which federal spending exploded because of the coronavirus pandemic.
“Congress passed an unprecedented amount of economic stimulus spending in 2020 and 2021,” said David Ditch, a federal budget analyst at the Heritage Foundation. “The vast majority of that spending is not occurring in the current fiscal year … and as such, the deficit is tactically smaller.”
In March 2020, Congress passed a coronavirus relief package totaling more than $2 trillion in hopes of staving off a recession. Later that year, they passed another $900 billion stimulus bill.
Approximately a year later, a month into Mr. Biden’s White House tenure, Congress passed a third coronavirus relief bill, totaling more than $1.9 trillion.
Overall, the new spending significantly expanded the federal deficit. At the start of Mr. Biden’s presidency, the deficit reached a record high of $3.3 trillion, roughly double the figure seen during the Great Recession of the late-2000s. At the end of 2019, for comparison, the deficit was only $984 billion.
The deficit decreased slightly to $2.7 trillion, the second-highest total ever recorded, at the end of 2021 because government spending had decreased as the coronavirus receded.
Experts further note that skyrocketing inflation, coupled with a post-COVID 19 economic resurgence, is leading to a decline in the deficit. Federal revenues have surged roughly 28% in the quarters of the current fiscal year.
The boost in revenues has helped curb the budget shortfall slightly, although the nonpartisan Congressional Budget Office estimates the country will still run a deficit of more than $1 trillion over the next 10 years.
“If a ham sandwich was sitting in the Oval Office, it would have presided over a deficit reduction of over $1 trillion during that time,” Mr. Ditch said.
Some also note that the current deficit would have shrunk even further if Mr. Biden had not championed legislation like the $1.2 trillion bipartisan infrastructure package. That bill is slated to add $256 billion to the deficit over the next decade, despite claims that it was fully paid for by supporters.
“I fully support spending on infrastructure,” said Sen. Rick Scott, Florida Republican. “But we cannot afford this reckless spending.”
