OCT 11, 2022
The Congressional Budget Office (CBO) today released its final monthly budget review of Fiscal Year (FY) 2022, which shows that the budget deficit totaled $1.4 trillion in FY 2022 and $431 billion in September.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
A $1.4 trillion annual deficit is most certainly not a cause for celebration—anyone who sees it differently is not taking the issue of fiscal responsibility seriously.
As expected, after two years of deficits averaging $3 trillion, the deficit is heading downwards as the economy recovers and COVID borrowing runs off. The budget is also benefiting from the short-term effects of inflation and higher revenues, though over the longer run, this will cause a fiscal deterioration. Together the legislative policies and executive orders that have been adopted under the Biden Administration will cause a significant worsening in the nation’s fiscal imbalances.
There have been attempts by the Administration to take credit for the decline in the deficit compared to last year, but in reality, their actions have added more than $4.8 trillion to the debt over the coming decade. While it made sense for Congress to borrow to fight the pandemic, the more recent borrowing has fueled inflation, driven the debt to where it is making the Federal Reserve’s job more complicated, and cannot be justified for any economic reason.
A new fiscal year offers a chance at a fresh start. Both Congress and the Administration should use this opportunity to take stock of our fiscal situation and pivot toward responsibility. At the very least, policymakers should pledge to add no more to the debt in the last three months of 2022. Not borrowing for end-of-year items should be an incredibly easy step to take in helping the Fed fight inflation and preventing our unsustainable debt growth from getting even worse.
Our political leaders, including President Biden himself, have said time and time again how important deficit reduction is to their agendas. Their actions in the next few months will show us just how important it really is.