Talk about double speak and political rhetoric The administration- any administration- speaks and the public listens with few questions.
March 16, 2022
Federal budget deficits grew to record-high levels during the COVID-19 pandemic and are now falling toward pre-pandemic levels. Some in the Administration, including the President himself, have touted and even taken credit for these welcome improvements.
However, these improvements are expected after the unprecedented increase in the deficit we experienced during the height of the COVID crisis; they are happening in spite of, not because of, measures taken by lawmakers.
Some recent deficits figures:
FY 2015 – $442 billion
FY 2017 – $665 billion
FY 2019 – $984 billion
FY 2020 – $3,132 billion
FY 2021 – $2,772 billion
FY 2022 (CBO) – $1,153 billion
In his first State of the Union address, President Joe Biden stated that he would be “the only president ever to cut the deficit by more than one trillion dollars in a single year” and that “by the end of this year, the deficit will be down to less than half what it was” before he took office.
In fact, this Congress and the Administration have added more than $2 trillion to the debt over a decade (at least $400 billion not counting COVID), on top of roughly $12 trillion the country was already projected to borrow.
Some additional context to keep in mind:
- Even as deficits continue to return to pre-pandemic levels, we’ll still be borrowing more than $1 trillion per year over most of the next decade.
- This level of projected borrowing would push debt to its highest share of the economy in our nation’s history by the end of the decade.
- While it is true that deficits fell by $360 billion last year and will fall more than $1 trillion this year, deficits were originally projected to fall by $875 billion last year and $1.2 trillion this year.
- Legislation signed by President Biden, including the American Rescue Plan and bipartisan infrastructure bill, has increased deficits by above $2 trillion, not reduced them.
Some also claim that inflation helps lower the national debt. It doesn’t really. What it does is lower the ratio of debt to GDP. As inflation rise the “dollar amount ” goes up. No more product actually has to be made. Just cost more. Debt goes up because interest rates go up be remains lower in the ratio to GDP. US imports cost more becauce the value of the dollar falls compared to other currencies, driving imported items pricing higher.
No matter what, the debt is still there. You’ll get to pay more taxes even at the same tax rate on your cost of living raises, which might help pay down the debt.
You just can’t pick one variable and claim victory.
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